Comparative statements of shareholders’ equity for Anaconda International Corpor
ID: 2431320 • Letter: C
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.
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.
Record sale of preferred stock.
Record sale of common stock.
Record declaration of cash dividend for preferred shares.
Record payment of cash dividend for preferred shares.
Record declaration of cash dividend for common shares.
Record payment of cash dividend for common shares.
Record transfer of net income to retained earnings.
Record the repurchase of shares for retirement. (Assume weighted average method).
Record declaration of cash dividend for preferred shares.
Record payment of cash dividend for preferred shares.
Record declaration of cash dividend for common shares
Record payment of cash dividend for common shares.
Record the stock split for preferred shares effected in the form of a dividend.
Record transfer of net income to retained earnings.
Record distribution of common stock dividend.
Record declaration of cash dividend for preferred shares.
Record payment of cash dividend for preferred shares.
Record declaration of cash dividend for common shares.
Record payment of cash dividend for common shares.
Record transfer of net income to retained earnings.
2. Prepare the shareholders’ equity section of Anaconda’s comparative balance sheets at December 31, 2020 and 2019.
ANACONDA INTERNATIONAL CORPORATIONStatements of Shareholders' Equity
For the Years Ended Dec. 31, 2018, 2019, and 2020
($ in millions) Preferred Stock
$10 par Common Stock
$1 par Additional
Paid-In Capital Retained Earnings Total
Shareholders' Equity Balance at January 1, 2018 50 450 1,596 2,096 Sale of preferred shares 10 420 430 Sale of common shares 7 63 70 Cash dividend, preferred (1 ) (1 ) Cash dividend, common (12 ) (12 ) Net income 220 220 Balance at December 31, 2018 10 57 933 1,803 2,803 Retirement of shares (4 ) (36 ) (14 ) (54 ) Cash dividend, preferred (1 ) (1 ) Cash dividend, common (16 ) (16 ) 3-for-2 split effected in the
form of a dividend 5 (5 ) Net income 370 370 Balance at December 31, 2019 15 53 892 2,142 3,102 Common stock dividend 7 68 (75 ) Cash dividend, preferred (1 ) (1 ) Cash dividend, common (18 ) (18 ) Net income 402 402 Balance at December 31, 2020 15 60 960 2,450 3,485
Explanation / Answer
1 Sl No. Account Debit Credit ($ in millions) 1 Cash 430 Preferred stock 10 Additional Paid-In Capital 420 (sale of preferred stock) 2 Cash 70 Common Stock 7 Additional Paid-In Capital 63 (sale of common stock) 3 Retained Earnings 1 Cash dividend payable-Preferred 1 (declaration of cash dividend for preferred shares) 4 Cash dividend payable-Preferred 1 Cash 1 (payment of cash dividend for preferred shares) 5 Retained Earnings 12 Cash dividend payable-Common 12 (declaration of cash dividend for common shares) 6 Cash dividend payable-Common 12 Cash 12 (payment of cash dividend for common shares) 7 Income summary 220 Retained Earnings 220 (transfer of net income to retained earnings) 8 Retained Earnings 14 Common Stock 36 Additional Paid-In Capital 4 Cash 54 (repurchase of shares for retirement) 9 Retained Earnings 1 Cash dividend payable-Preferred 1 (declaration of cash dividend for preferred shares) 10 Cash dividend payable-Preferred 1 Cash 1 (payment of cash dividend for preferred shares) 11 Retained Earnings 16 Cash dividend payable-Common 16 (declaration of cash dividend for common shares) 12 Cash dividend payable-Common 16 Cash 16 (payment of cash dividend for common shares) 13 Additional Paid-In Capital 5 Preferred stock 5 (stock split for preferred shares effected in the form of a dividend) 14 Income summary 370 Retained Earnings 370 (transfer of net income to retained earnings) 15 Retained Earnings 75 Common Stock 7 Additional Paid-In Capital 68 (distribution of common stock dividend) 16 Retained Earnings 1 Cash dividend payable-Preferred 1 (declaration of cash dividend for preferred shares) 17 Cash dividend payable-Preferred 1 Cash 1 (payment of cash dividend for preferred shares) 18 Retained Earnings 18 Cash dividend payable-Common 18 (declaration of cash dividend for common shares) 19 Cash dividend payable-Common 18 Cash 18 (payment of cash dividend for common shares) 20 Income summary 402 Retained Earnings 402 (transfer of net income to retained earnings) 2 Shareholer's Equity section 2020 2019 ($ in millions) Paid in capital Common stock 60 53 Preferred stock 15 15 Additional Paid-In Capital 960 892 Total paid in capital 1035 960 Retained Earnings 2450 2142 Total shareholder's equity 3485 3102
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