Problem:
Johnston, Inc. engaged in the following transactions involving treasury stock:
Feb. 10 Purchased for cash 17,000 shares of treasurey stock at a price of $25 per share.
June 4 Reissued 6,000 shares of treasurey stock at a price of $33 per share.
Dec. 22 Reissued 4,000 shares of treasure stock at a price of $22 per share.
a. Prepare general journal entries to record these transactions.
b. Compute the amount of retained earnings that should be restricted because of the treasure stock still owned at December 31.
c. Does a restriction on retained earnings affect the dollar amount of retained earnings reported in the balance sheet? Explain briefly.