Question

18-6

Comparative statements of shareholders’ equity for Anaconda International Corporation were reported as follows for the fiscal years ending December 31, 2021, 2022, and 2023.

ANACONDA INTERNATIONAL CORPORATION Statements of Shareholders' Equity For the Years Ended Dec. 31, 2021, 2022, and 2023 ($ in millions)
	Preferred Stock $10 par		Common Stock $1 par				Additional Paid-In Capital				Retained Earnings				Total Shareholders' Equity
Balance at January 1, 2021				50				450				1,596				2,096
Sale of preferred shares	10							420								430
Sale of common shares				7				63								70
Cash dividend, preferred												(1	)			(1	)
Cash dividend, common												(12	)			(12	)
Net income												220				220
Balance at December 31, 2021	10			57				933				1,803				2,803
Retirement of shares				(4	)			(36	)			(14	)			(54	)
Cash dividend, preferred												(1	)			(1	)
Cash dividend, common												(16	)			(16	)
3-for-2 split effected in the form of a dividend	5							(5	)
Net income												370				370
Balance at December 31, 2022	15			53				892				2,142				3,102
Common stock dividend				7				68				(75	)
Cash dividend, preferred												(1	)			(1	)
Cash dividend, common												(18	)			(18	)
Net income												402				402
Balance at December 31, 2023	15			60				960				2,450				3,485

Required:
1. Infer from the statements the events and transactions that affected Anaconda International Corporation’s shareholders’ equity during 2021, 2022, and 2023. Prepare the journal entries that reflect those events and transactions. (Hint: In lieu of revenues and expenses, use an account titled "Income summary" to close net income or net loss.)
2. Prepare the shareholders’ equity section of Anaconda’s comparative balance sheets at December 31, 2023 and 2022.

Answer 1