Homework answers / question archive / Elston Limited had the following equity accounts on January 1, 2020: Share Capital—Ordinary (£5 par) $400,000, Share Premium—Ordinary $200,000, and Retained Earnings $100,000

Elston Limited had the following equity accounts on January 1, 2020: Share Capital—Ordinary (£5 par) $400,000, Share Premium—Ordinary $200,000, and Retained Earnings $100,000

Accounting

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Elston Limited had the following equity accounts on January 1, 2020: Share Capital—Ordinary (£5 par) $400,000, Share Premium—Ordinary $200,000, and Retained Earnings $100,000. In 2020, the company had the following treasury share transactions.

Elston uses the cost method of accounting for treasury shares. In 2020, the company reported net income of $34,000.

Instructions:

a. Journalize the treasury share transactions, and prepare the closing entry at December 31, 2020, for net income.

b. Post the journal related to these accounts: (1) Share Premium—Treasury, (2) Treasury Shares, and (3) Retained Earnings. Ese a formal form of General Ledger.

c. Prepare the equity section for Elston Limited at December 31, 2020.