On December 30, 1996, Washington and Associates purchased 500 of its 5,000 outstanding common shares at a price of $50 per share. Before the treasury stock purchase, the company’s financial statements appeared as below. Income Statement Revenues $800,000 Expenses 560,000 Net income $240,000 Balance Sheet Assets $1,760,000 Liabilities 900,000 Stockholders’ equity 860,000 REQUIRED:

a. Provide the journal entry for the treasury stock purchase.

b. Compute the debt/equity ratio before and after the treasury stock purchase.

c. Compute earnings per share before and after the treasury stock purchase.