Washington Company has the following stockholders equity accounts at December 31, 2020. Common Stock ($100 par value,

Question:

Washington Company has the following stockholders’ equity accounts at December 31, 2020.

Common Stock ($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 2021.

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 (2) above was paid.

4. The treasury shares purchased in (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 (5) above were resold at $96 per share.

b. Prepare the stockholders’ equity section of Washington Company’s balance sheet after giving eff ect 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.

Balance Sheet
Balance 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...

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