Question
In: Accounting
National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in...
National Supply’s shareholders’ equity included the following
accounts at December 31, 2017:
| Shareholders' Equity | ($ in millions) | |
| Common stock, 4 million shares at $1 par | $ | 4,000,000 |
| Paid-in capital—excess of par | 16,000,000 | |
| Retained earnings | 73,000,000 | |
Required:
1a. 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, 2018 | Reacquired 140,000 shares at $7 per share. |
| February 17, 2019 | Reacquired 140,000 shares at $4.50 per share. |
| November 9, 2020 | Sold 80,000 shares at $6 per share (assume FIFO cost). |
1b. Prepare the shareholders’ equity section of
National Supply’s balance sheet at December 31, 2020, assuming the
shares are (a) retired and (b) accounted for as treasury stock. Net
income was $12 million in 2018, $13 million in 2019, and $14
million in 2020. No dividends were paid during the three-year
period.
Solutions
Expert Solution
1a)
Retired
| Date | Particulars | Debit | Credit |
| Feb 15 | Common stock | 140000 | |
| Paid in capital - excess of par | 560000 | ||
| Retained earnings | 280000 | ||
| Cash | 980000 | ||
| Feb 17 | Common stock | 140000 | |
| Paid in capital - excess of par | 560000 | ||
| Paid in capital - Share repurchase | 70000 | ||
| Cash | 630000 | ||
| Nov 9 | Cash a/c | 480000 | |
| common stock | 80000 | ||
| Paid in capital- excess of par | 400000 |
Treasury Stock
| Date | Particulars | Debit | Credit |
| Feb 15 | Treasury stock | 980000 | |
| cash | 980000 | ||
| Feb 17 | Treasury stock | 630000 | |
| Cash | 630000 | ||
| Nov 19 | Cash a/c | 480000 | |
| Retained earning | 80000 | ||
| Treasury stock | 560000 |
2b)
Balance sheet
| Particulars | Retired | Treasury stock |
| Paid in capital | ||
| common stock (note 1) | 3800000 | 4000000 |
| Paid in capital excess of par | 15280000 | 16000000 |
| Paid in cap - share repurchase | 70000 | 0 |
| Retained earning (note 2) | 111720000 | 111920000 |
| Less- treasury stock | 0 | (1050000) |
| TOTAL SHAREHOLDER EQUITY | 130870000 | 130870000 |
Note 1) Common stock calculation after effect of journal entries
Retired = 4000000 - 140000 - 140000 + 80000 = 3800000
Treasury stock = 4000000
Note 2 Retained earning calculation
Retired = 73000000-280000+12000000+13000000+14000000 = 111720000
Treasury = 73000000-80000+12000000+13000000+14000000 = 111920000
ekkarill92 answered 1 year agoRelated Solutions
National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in...
National Supply’s shareholders’ equity included the following
accounts at December 31, 2017:
Shareholders' Equity
($ in millions)
Common stock, 3 million shares at $1 par
$
3,000,000
Paid-in capital—excess of par
9,000,000
Retained earnings
71,500,000
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...
National Supply’s shareholders’ equity included the following accounts at December 31, 2017: Shareholders' Equity ($ in...
National Supply’s shareholders’ equity included the following
accounts at December 31, 2017: Shareholders' Equity ($ in millions)
Common stock, 7 million shares at $1 par $ 7,000,000 Paid-in
capital—excess of par 63,000,000 Retained earnings 95,500,000
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...
National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock,...
National Supply’s shareholders’ equity included the following
accounts at December 31, 2020:
Shareholders' Equity
Common stock, 7 million shares at $1 par
$
7,000,000
Paid-in capital—excess of par
63,000,000
Retained earnings
95,500,000
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...
National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock,...
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 30,000,000
Retained earnings 98,500,000
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...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31,
2017:
Paid-in
capital:
Preferred stock, 8.5%, 94,000
shares at $1 par
$
94,000
Common stock, 444,400 shares at
$1 par
444,400
Paid-in capital—excess of par,
preferred
1,555,000
Paid-in capital—excess of par,
common
2,605,000
Retained earnings
9,345,000
Treasury stock, at cost; 4,400
common shares
(44,000
)
Total shareholders' equity
$
13,999,400
During 2018, several events and transactions affected the retained
earnings of Consolidated Paper.
Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31,
2017:
Paid-in
capital:
Preferred stock, 7.5%, 82,000
shares at $1 par
$
82,000
Common stock, 323,200 shares at
$1 par
323,200
Paid-in capital—excess of par,
preferred
1,445,000
Paid-in capital—excess of par,
common
2,495,000
Retained earnings
8,245,000
Treasury stock, at cost; 3,200
common shares
(38,400
)
Total shareholders' equity
$
12,551,800
During 2018, several events and transactions affected the retained
earnings of Consolidated Paper.
Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31, 2017:
Paid-in capital: Preferred stock, 7.0%, 91,000 shares at $1 par $
91,000 Common stock, 414,100 shares at $1 par 414,100 Paid-in
capital—excess of par, preferred 1,525,000 Paid-in capital—excess
of par, common 2,575,000 Retained earnings 9,045,000 Treasury
stock, at cost; 4,100 common shares (41,000 ) Total shareholders'
equity $ 13,609,100 During 2018, several events and transactions
affected the retained earnings of Consolidated Paper. Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31,
2017:
Paid-in capital:
Preferred stock, 8.0%, 85,000 shares at $1 par
$
85,000
Common stock, 353,500 shares at $1 par
353,500
Paid-in capital—excess of par, preferred
1,475,000
Paid-in capital—excess of par, common
2,525,000
Retained earnings
8,545,000
Treasury stock, at cost; 3,500 common shares
(38,500
)
Total shareholders' equity
$
12,945,000
During 2018, several events and transactions affected the retained
earnings of Consolidated Paper.
Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31, 2015:
Paid-in capital:
Preferred stock, 8.8%,
90,000 shares at $1 par
$
90,000
Common stock, 364,000
shares at $1 par
364,000
Paid-in capital—excess of
par, preferred
1,437,000
Paid-in capital—excess of
par, common
2,574,000
Retained earnings
9,735,000
Treasury stock, at cost; 4,000 common shares
(44,000
)
Total shareholders' equity
$
14,156,000
During 2016, several events and transactions affected the
retained earnings of Consolidated Paper.
Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31, 2015:
Paid-in
capital:
Preferred stock, 8.0%, 93,000
shares at $1 par
$
93,000
Common stock, 434,300 shares at
$1 par
434,300
Paid-in capital—excess of par,
preferred
1,545,000
Paid-in capital—excess of par,
common
2,595,000
Retained
earnings
9,245,000
Treasury stock, at
cost; 4,300 common shares
(51,600
)
Total shareholders'
equity
$
13,860,700
During 2016, several events and
transactions affected the retained earnings of Consolidated
Paper.
Required:...
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