Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

National Supply's shareholders' equity included the following accounts at December 31, 2020: Shareholders' EquityCommon stock, 5 million shares at $1 par$5,000,000Paid-in capitalexcess of par25,000,000Retained earnings86,500,000

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

Shareholders' EquityCommon stock, 5 million shares at $1 par$5,000,000Paid-in capitalexcess of par25,000,000Retained earnings86,500,000

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, 2021Reacquired 320,000 shares at $8 per share.February 17, 2022Reacquired 320,000 shares at $5.50 per share.November 9, 2023Sold 215,000 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 $12 million in 2021, $14 million in 2022, and $16 million in 2023. No dividends were paid during the three-year period.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Carl S Warren, James M Reeve, Jonathan Duchac

12th Edition

1133952402, 978-1133952404

More Books

Students also viewed these Accounting questions

Question

What does OLAP stand for? AppendixLO1

Answered: 1 week ago

Question

Coaching and motivational behavior

Answered: 1 week ago