Washinton Company has the following stockerholders' equity accounts at December 31, 2020.Common Stock ($100 par value, authorized 8,000)$480,000Retained Earnings294,000Instructions:a. Prepare entries in journal form to record the following transactions, which took place during 2021. 1. 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.)A $20 per share cash dividend was declared.The dividend declared in (2) above was paid. The treasury shares purchased in (1) above were resold at $102 per share.500 shares of outstanding stock were purchased at $105 per share.350 of the shares purchased in (5) above were resold at $96 per share.b. Prepare the stockholders' equity section of Washington COmpany's balance sheet after giving effect to these transactions, assuming that the net income for 2021 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.

Journal entries are to made to record the transactions for issue of shares, buy back of shares, etc.…

Answered: Washinton Company has the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Washinton Company has the following stockerholders' equity accounts at December 31, 2020.

Common Stock ($100 par value, authorized 8,000)	$480,000
Retained Earnings	294,000

Instructions:

a. Prepare entries in journal form to record the following transactions, which took place during 2021.

1. 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.)
A $20 per share cash dividend was declared.
The dividend declared in (2) above was paid.
The treasury shares purchased in (1) above were resold at $102 per share.
500 shares of outstanding stock were purchased at $105 per share.
350 of the shares purchased in (5) above were resold at $96 per share.

b. Prepare the stockholders' equity section of Washington COmpany's balance sheet after giving effect to these transactions, assuming that the net income for 2021 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.

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