National Supply's shareholders' equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock, 6 million shares at $1 par $ 6,000,000 Paid-in capital-excess of par 30,000,000 Retained earnings 86,500,000 Page 1092 Required: 1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February 15, 2021 Reacquired 300,000 shares at $8 per share. February 17, 2022 Reacquired 300,000 shares at $5.50 per share. November 9, 2023 Sold 200,000 shares at $7 per share (assume FIFO cost). 2. Prepare the shareholders' equity section of National Supply's balance sheet at December 31, 2023, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $14 million in 2021, $15 million in 2022, and $16 million in 2023. No dividends were paid during the three-year period.
National Supply's shareholders' equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock, 6 million shares at $1 par $ 6,000,000 Paid-in capital-excess of par 30,000,000 Retained earnings 86,500,000 Page 1092 Required: 1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February 15, 2021 Reacquired 300,000 shares at $8 per share. February 17, 2022 Reacquired 300,000 shares at $5.50 per share. November 9, 2023 Sold 200,000 shares at $7 per share (assume FIFO cost). 2. Prepare the shareholders' equity section of National Supply's balance sheet at December 31, 2023, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $14 million in 2021, $15 million in 2022, and $16 million in 2023. No dividends were paid during the three-year period.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:National Supply's shareholders' equity included the following accounts at December 31, 2020:
Shareholders' Equity
Common stock, 6 million shares at $1 par $6,000,000
Paid-in capital-excess of par
30,000,000
Retained earnings
86,500,000
Page 1092
Required:
1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each
of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock.
February 15, 2021 Reacquired 300,000 shares at $8 per share.
February 17, 2022 Reacquired 300,000 shares at $5.50 per share.
November 9, 2023 Sold 200,000 shares at $7 per share (assume FIFO cost).
2. Prepare the shareholders' equity section of National Supply's balance sheet at December 31, 2023, assuming the shares are (a) retired
and (b) accounted for as treasury stock. Net income was $14 million in 2021, $15 million in 2022, and $16 million in 2023. No
dividends were paid during the three-year period.
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