National Supplys shareholders equity included the following accounts at December 31, 2020: Shareholders Equity ............................................($ in millions)

Question:

National Supply’s shareholders’ equity included the following accounts at December 31, 2020:

Shareholders’ Equity ............................................($ in millions)
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

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.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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