(LO2,3,4) GROUPWORK (Treasury Stock—Cost Method—Equity Section Preparation) Washington Company has the following stockholders’ equity accounts at December 31, 2017.

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 2018.

(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 effect to these transactions, assuming that the net income for 2018 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.