National Supply reacquired shares of its common stock in two separate transactio

Question

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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

    

    

Prepare the shareholders’ equity section of National Supply’s balance sheet at December 31, 2018, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $20 million in 2016, $21 million in 2017, and $22 million in 2018. No dividends were paid during the three-year period. (Enter your answers in whole dollars.)

     

National Supply’s shareholders’ equity included the following accounts at December 31, 2015:

Explanation / Answer

Solution:-

1.

2.

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Date Account titles and explanation Debit Credit Feb. 15,2016 (a) retired Common stock (300,000 * 1) 300,000 Pain-in-capital-excess of par (300,000 * 6) 1,800,000 Retained earning 600,000 Cash 2,700,000 (b) accounted for as treasury stock Treasury stock 2,700,000 Cash 2,700,000 Feb. 17, 2017 (a) retired Common stock (300,000 * 1) 300,000 Paid-in capital excess of par (300,000 * 6) 1,800,000 Paid-in capital- share repurchase (300,000 * .50) 150,000 Cash (300,000 * 6.50) 1,950,000 (b) accounted for as treasury stock Treasury stock 1,950,000 Cash 1,950,000 Nov. 9, 2018 (a) retired Cash (200,000 * 8) 1,600,000 Common stock (200,000 * 1) 200,000 Paid-in capital- excess of par (200,000 * 7) 1,400,000 (b) accounted for as treasury stock Cash (200,000 * 8) 1,600,000 Retained earnings (200,000 * 1) 200,000 Treasury stock (200,000 * 9) 1,800,000

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