Comparative statements of shareholders\' equity for Anaconda International Corpo

Question

Comparative statements of shareholders' equity for Anaconda International Corporation were reported as follows for the fiscal years ending December 31, 2018, 2019, and 2020 ANACONDA INTERNATIONAL CORPORATION Statements of Shareholders' Equity For the Years Ended Dec. 31, 2018, 2019, and 2020 ($ in millions) Additional Paid-In Capital Total Preferred Stock $10 par Common Stock $1 par 60 Retained Earnings 1,794 Shareholders 360 820 42 Equity 2,214 840 49 Balance at January 1, 2018 20 Sale of preferred shares Sale of common shares Cash dividend, preferred Cash dividend, common Net income Balance at December 31, 2018 (14) 310 (14) 310 20 67 1,222 2,088 3,397 Retirement of shares Ca (30) (47) sh dividend, preferred Cash dividend, common (18) (18) 3-for-2 split effected in the form of a dividend 10 (10) 460 3,790 460 (47) (20) Net income Balance at December 31, 2019 30 62 1,182 2,516 Common stock dividend 4 1 sh dividend, preferred Cash dividend, common Net income (20) 502 502 Balance at December 31, 2020 30 68 1,223 2,949 4,270 Required: 1. Infer from the statements the events and transactions that affected Anaconda International Corporation's shareholders' equity during 2018, 2019, and 2020. Prepare the journal entries that reflect those events and transactions 2. Prepare the shareholders' equity section of Anaconda's comparative balance sheets at December 31, 2020 and 2019

Explanation / Answer

1 Date Account tiltes and explanation Debit Credit 2018 Cash 840 Preferred stock 20 Additional paid-in capital 820 (Sale of preferred stock) Cash 49 Common stock 7 Additional paid-in capital 42 (Sale of common shares) Retained earnings 2 Preferred dividend payable 2 (Preferred dividend declared) Retained earnings 14 Common dividend payable 14 (Common dividend declared) Income summary 310 Retained earnings 310 (Net income recorded) 2019 Retained earnings 12 Common stock 5 Additional paid-in capital 30 Cash 47 (Retirement of shares) Retained earnings 2 Preferred dividend payable 2 (Preferred dividend declared) Retained earnings 18 Common dividend payable 18 (Common dividend declared) Additional paid-in capital 10 Preferred stock 10 (3-for-2 split effected in the form of dividend) Income summary 460 Retained earnings 460 (Net income recorded) 2020 Retained earnings 47 Common stock 6 Additional paid-in capital 41 (Common stock dividend) Retained earnings 2 Preferred dividend payable 2 (Preferred dividend declared) Retained earnings 20 Common dividend payable 20 (Common dividend declared) Income summary 502 Retained earnings 502 (Net income recorded) 2 Shareholder's equity section 2020 2019 Paid in capital: Preferred stock 30 30 Common stock 68 62 Additional paid-in capital 1223 1182 Total Paid in capital 1321 1274 Retained earnings 2949 2516 Total shareholder's equity 4270 3790

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