(Treasury StockCost MethodEquity Section Preparation) Washington Company has the following stockholders equity accounts at December 31, 2010....
Question:
(Treasury Stock—Cost Method—Equity Section Preparation) Washington Company has the following stockholders’ equity accounts at December 31, 2010.
Common Stock—$100 par value, authorized 8,000 shares$480,000
Retained Earnings 294,000
(a) Prepare entries in journal form to record the following transactions, which took place during 2011.
(1) 280 shares of outstanding stock 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 of outstanding stock 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 stockholders’ equity section of Washington Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2011 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
a 1 Treasury Stock 280 X 97 27160 Cash 27160 2 Retained Earnings 90400 Dividends Payab...View the full answer
Intermediate Accounting
ISBN: 978-0470423684
13th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
