Washington Company has the following equity accounts at December 31, 2015.

Instructions

(a) Prepare entries in journal form to record the following transactions, which took place during 2016.
(1) 280 ordinary shares were purchased at \($97\) per share. (These are to be accounted for using the cost method.)
(2) A \($20\) per share cash dividend was declared.
(3) The dividend declared in No. 2 above was paid.
(4) The treasury shares purchased in No. 1 above were resold at \($102\) per share.
(5) 500 shares were purchased at \($105\) per share.
(6) 350 of the shares purchased in No. 5 above were resold at \($96\) per share.

(b) Prepare the equity section of Washington Company’s statement of financial position after giving effect to these transactions, assuming that the net income for 2016 was \($94\),000. Country law requires restriction of retained earnings for the amount of treasury shares.

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Share Capital-Ordinary-$100 par value, authorized 8,000 shares Retained Earnings $480,000 294,000