Mask SE has 30,000 shares of €10 par value ordinary shares authorized and 20,000 shares issued and outstanding. On August 15, 2019, Mask purchased 1,000 shares of treasury shares for €18 per share. Mask uses the cost method to account for treasury shares. On September 14, 2019, Mask sold 500 shares of the treasury shares for €20 per share.
In October 2019, Mask declared and distributed 1,950 shares as a share dividend from unissued shares when the market price of the ordinary shares was €21 per share.
On December 20, 2019, Mask declared a €1 per share cash dividend, payable on January 10, 2020, to shareholders of record on December 31, 2019.
Instructions
a. How should Mask account for the purchase and sale of the treasury shares, and how should the treasury shares be presented in the statement of financial position at December 31, 2019?
b. How should Mask account for the share dividend, and how would it affect equity at December 31, 2019? Why?
c. How should Mask account for the cash dividend, and how would it affect the statement of financial position at December 31, 2019? Why?