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.