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Waterway Company has the following stockholders' equity accounts at December 31, 2020
Waterway Company has the following stockholders' equity accounts at December 31, 2020.
Common Stock ($100 par value, authorized 7,900 shares) $490,800
Retained Earnings 273,600
Collapse question part
(a)
Correct answer. Your answer is correct.
Prepare entries in journal form to record the following transactions, which took place during 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
(1) 270 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.)
(2) A $22 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) 470 shares of outstanding stock were purchased at $104 per share.
(6) 320 of the shares purchased in (5) above were resold at $96 per share.
No.
Account Titles and Explanation
Debit
Credit
1.
Entry field with correct answer
Treasury Stock
Entry field with correct answer
26,190
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cash
Entry field with correct answer
Entry field with correct answer
26,190
2.
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Retained Earnings
Entry field with correct answer
102,036
Entry field with correct answer
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Dividends Payable
Entry field with correct answer
Entry field with correct answer
102,036
3.
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Dividends Payable
Entry field with correct answer
102,036
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Cash
Entry field with correct answer
Entry field with correct answer
102,036
4.
Entry field with correct answer
Cash
Entry field with correct answer
27,540
Entry field with correct answer
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Treasury Stock
Entry field with correct answer
Entry field with correct answer
26,190
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Paid-in Capital from Treasury Stock
Entry field with correct answer
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1,350
5.
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Treasury Stock
Entry field with correct answer
48,880
Entry field with correct answer
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Cash
Entry field with correct answer
Entry field with correct answer
48,880
6.
Entry field with correct answer
Cash
Entry field with correct answer
30,720
Entry field with correct answer
Entry field with correct answer
Paid-in Capital from Treasury Stock
Entry field with correct answer
1,350
Entry field with correct answer
Entry field with correct answer
Retained Earnings
Entry field with correct answer
1,210
Entry field with correct answer
Entry field with correct answer
Treasury Stock
Entry field with correct answer
Entry field with correct answer
33,280
Collapse question part
(b)
Prepare the stockholders' equity section of Waterway Company's balance sheet after giving effect to these transactions, assuming that the net income for 2021 was $92,600. State law requires restriction of retained earnings for the amount of treasury stock. (Enter account name only and do not provide descriptive information.)
WATERWAY COMPANY
Stockholders' Equity
$
:
$
Expert Solution
PFA
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