QUESTION #2 Instructions: (a) Journalize the treasury share transactions. Prepare the closing entry at December 31, 2017, for net income. (b) Post to the accounts shown below. (c) Prepare the equity section for Elston limited at December 31, 2017.
COMPANY INFO: Elston Limited had the following equity accounts on January 1, 2017: Share Capital-Ordinary (5 par) 400,000, Share Premium-Ordinary 200,000, and Retained Earnings 100,000. ln 2017, the company had the following treasury share transactions. Elston uses the cost method of accounting for treasury shares. The company reported net income of 34,000. Mar. 1 Purchased 5,000 shares at 9 per share Jun. 1 Sold 500 shares purchased on Mar. 1 at 12 per share. Sep. 1 Sold 2,500 shares purchased on Mar. 1 at 10 per share. Dec. 1 Sold 1,000 shares purchased on Mar. 1 at 6 per share. Dec. 31 Performed closing entry to close net income of 34,000 to retained earnings. (Hint: see text p170.)
GENERAL JOURNAL
(a)
Mar	Account Title	Debit	Credit
Jun	Account Title	Debit	Credit
Sep	Account Title	Debit	Credit
Dec	Account Title	Debit	Credit
Dec	Account Title	Debit	Credit

(c)

Instructions: (b) Post above journal entries to the following T-accounts:

select T-Accounts

CASH

TREASURY SHARES

SHARE CAPITALORDINARY

RETAINED EARNINGS

Bal. 200,000

Bal. 100,000

SHARE CAPITALORDINARY

SHARE PREMIUMTREASURY

INCOME SUMMARY

Bal. 400,000

(c)

Instructions: Prepare the EQUITY section of the statement of financial position at December 31, 2017.

Your response: ELSTON LIMITED Partial Statement of Financial Position December 31, 2017 Equity Share CapitalOrdinary, 5 par, 80,000 shares issued and 79,000 outstanding Share PremiumOrdinary Share PremiumTreasury ... Retained Earnings .. Less: Treasury Shares (1,000 shares) Total Equity