Washington Company has the following equity accounts at December 31, 2019.

Share CapitalOrdinary$100 par value, authorized 8,000 shares, issued and outstanding 5,000 shares

$500,000

Retained Earnings

300,000

Instructions

(a) Prepare entries in journal form to record the following transactions, which took place during 2020.

(1) January 13 200 ordinary shares were purchased at $105 per share. (These are to be accounted for using the cost method.)

(2) February 28 A $2 per share cash dividend was declared.

(3) March 20 The dividend declared in No. 2 above was paid.

(4) April 10 The treasury shares purchased in No. 1 above were resold at $106 per share.

(5) May 23 500 shares were purchased at $105 per share.

(6) December 29 350 of the shares purchased in No. 5 above were resold at $96 per share.

(b) Prepare the equity section of Washington Company's statement of financial position at December 31, 2020, after giving effect to these transactions, assuming that the net income for 2020 was $100,000.