Question

Washington Company has the following equity accounts at December 31, 2010.
Share Capital—Ordinary—$100 par value, authorized 8,000 shares ........ $480,000
Retained Earnings...................................................................................... 294,000

Instructions
(a) Prepare entries in journal form to record the following transactions, which took place during 2011.
(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 2011 was $94,000. Country law requires restriction of retained earnings for the amount of treasury shares.



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  • CreatedJune 17, 2013
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