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Item 1

Item 1 25 points

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 capitalexcess 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 Supplys 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.

Record the purchase of 300,000 shares at $8 per share on February 15, 2021 for retirement.

Record the purchase of 300,000 shares at $5.50 per share on February 17, 2022 for retirement.

Record the sale of 200,000 shares at $7 per share (assume FIFO cost) on November 9, 2023.

Record the purchase of 300,000 shares at $8 per share on February 15, 2021 that are accounted for as treasury stock.

Record the purchase of 300,000 shares at $5.50 per share on February 17, 2022 that are accounted for as treasury stock.

Record the sale of 200,000 shares at $7 per share (assume FIFO cost) on November 9, 2023.

Prepare the shareholders equity section of National Supplys 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. (Enter your answers in whole dollars.)