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In: Accounting

Washington Company has the following stockholders' equity accounts at December 31st, 2014. Common Stock ($100 par...

Washington Company has the following stockholders' equity accounts at December 31st, 2014.

Common Stock ($100 par value, authorized 8,000 shares) $480,000
Retained Earnings                                                                $294,000

1) Prepare entries in hournal form to record the following transactions, which took place during 2015:
    a) 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost
    method).
    b) A $20 per share cash dividend was declared.
    c) The dividend declared in (b) above was paid.
    d) The treasuryshares pruchased in (a) above were resold at $102 per share.
    e) 500 shares of outstanding stock were purchased at $105 per share.
    f) 350 of the shares purchased in (e) above were resold at $96 per share.

2) Prepare the stockholders' equity section of Washington Company's balance sheet after giving effect to these transactions, assuming that the net income for 2015 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.

Solutions

Expert Solution

Journal entries :

No account and explanation debit credit
a Treasury Stock (280*97) 27160
Cash 27160
(To record treasury stock purchased)
b Cash dividend (4800-280)*20 90400
Dividend payable 90400
(To record dividend declared)
c Dividend payable 90400
Cash 90400
(To record dividend paid)
d Cash (280*102) 28560
Treasury Stock 27160
Paid in capital from sale of treasury Stock 1400
(TO record sale of treasury Stock)
e Treasury Stock (500*105) 52500
Cash 52500
(To record treasury Stock purchased)
f Cash (350*96) 33600
Paid in capital from sale of treasury Stock 1400
Retained earnings 1750
Treasury Stock (350*105) 36750
(To record sale of treasury Stock)

2) Prepare the stockholders' equity section of Washington Company's balance sheet after giving effect to these transactions

Paid in capital
Common Stock 480000
Total paid in capital 480000
Retained earnings 295850
TOtal 775850
Less; Treasury Stock (150*105) -15750
Total Stockholder's equity 760100

ekkarill92 answered 3 years ago
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