Reference no: EM132608553

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

Shareholders' Equity Common stock, 5 million shares at $1 par $5,000,000

Paid-in capital-excess of par 25,000,000

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 320,000 shares at $8 per share. February 17, 2022 Reacquired 320,000 shares at $5.50 per share. November 9, 2023 Sold 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.