Question $3$

Smart Company was established in January $2021$ with authorization to issue $10,0008\%$

cumulative preference share with $$50$ par value and $2,000,000$ ordinary shares with $$1$ par value.

At incorporation, the company issued $8,000$ preference shares for $$500,000$ cash and $1,050,000$

ordinary shares for $$2,602,000.$ No dividend is paid in $2021$ and retained earnings at $31$

December $2021$ was $$1,816,000.$

During $2022,$ the corporation had the following transactions and events pertaining to its equity.

Jan $25$ Purchased $20,000$ ordinary shares for the treasury at a cost of $$3$ per share.

Apr. $14$ Reissued $10,000$ treasury shares$-$ordinary for $$42,000.$

Nov. $10$ Reissued $5,000$ treasury shares$-$ordinary for $$12,000.$

Net income for the year $2022$ was $$452,000.$ At $31$ Dec $2022,$ it declared a dividend of $$1$ per

ordinary share, to be payable in April $2023.$

Instructions

$($a$.)$ Journalize the transactions related to treasury shares.

$($b$.)$ Prepare the equity section of the statement of financial position at December $31,2022.$