Washington Company has the following equity accounts at December 31, 2022.

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 2023.

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 2023 was $94,000. Country law requires restriction of retained earnings for the amount of treasury shares.