‘To be solved by AjKaushal’ Can you please help with the second requirement? National Supply’s shareholders’ equity included the following accounts at December 31, 2012: Shareholders’ Equ

‘To be solved by AjKaushal’

Can you please help with the second requirement?

National Supply’s shareholders’ equity included the following accounts at December 31, 2012:

Shareholders’ Equity ($ in millions)

Common stock, 6 million shares at $1 par $ 6,000,000

Paid-in capital—excess of par 30,000,000

Retained earnings 86,500,000

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

February 15, 2013 Reacquired 300,000 shares at $8 per share.

February 17, 2014 Reacquired 300,000 shares at $5.50 per share.

November 9, 2015 Sold 200,000 shares at $7 per share (assume FIFO cost).

2. Prepare the shareholders’ equity section of National Supply’s balance sheet at December 31, 2015, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $14 million in 2013, $15 million in 2014, and $16 million in 2015. No dividends were paid during the three-year period. (Enter your answers in whole dollars.)

ATTACHMENT PREVIEW

Download attachment

Student Name:
Class:
Problem 18-12
Part A, Requirement 1:
General Journal
Account
Debit
Credit
January 2, 2013
Cash
30,000,000
«- Correct!
Common stock
5,000,000
Paid-in capital – excess of par, common
25,000,000
January 2, 2013
Cash
20,000,000
«- Correct!
Preferred stock
5,000,000
Paid-in capital – excess of par, preferred
15,000,000
Part A, Requirement 2:
NICKLAUS CORPORATION
Balance Sheet-Shareholders’ Equity Section
March 31, 2013
Shareholders’ equity
Preferred stock, $5 par, authorized 1,000,000 shares,
issued and outstanding 1,000,000 shares
$5,000,000
Common stock, $1 par, authorized 5,000,000 shares,
issued and outstanding 3,000,000 shares
5,000,000
Paid-in capital – excess of par
40,000,000
Retained earnings
1,000,000
Total shareholders’ equity
$51,000,000
Correct!
Part B, Requirement 1:
NICKLAUS CORPORATION
General Journal
Account
Debit
Credit
June 30, 2013
Treasury stock
Cash
2,400,000
«- Correct!
July 31, 2013
Cash
750,000
«- Correct!
Treasury stock
600,000
Paid-in capital – share repurchase
150,000
September 30, 2013
Cash
500,000
Paid-in capital – share repurchase
100,000
Treasury stock
600,000
«- Correct!
Part B, Requirement 2:
NICKLAUS CORPORATION
Balance Sheet-Shareholders’ Equity Section
September 30, 2013
Shareholders’ equity
Preferred stock, $5 par, authorized 1,000,000 shares,
issued and outstanding 1,000,000 shares
$5,000,000
Common stock, $1 par, authorized 5,000,000 shares,
issued 3,000,000 shares, 2,900,000 shares outstanding
5,000,000
Paid-in capital – excess of par
40,000
Paid-in capital – share repurchase
750,000
Retained earnings
3,000,000
$13,790,000
Less: Treasury stock (200,000 shares at cost)
2,400,000
Total shareholders’ equity
$9,390,000
Try again!
Part C, Requirement 1:
NICKLAUS CORPORATION
General Journal
Account
Debit
Credit
October 1, 2013
No entry
November 1, 2013
Retained earnings
2,750,000
«- Try again!
Dividends payable – common
2,500,000
Dividends payable – preferred
250,000
November 15, 2013
No Entry
December 1, 2013
Dividends payable – common
Dividends payable – preferred
Cash
December 2, 2013
Retained earnings
Common stock dividends distributable
Paid-in capital – excess of par, common
December 28, 2013
Common stock dividends distributable
Common stock
Part C, Requirement 2:
NICKLAUS CORPORATION
Balance Sheet-Shareholders’ Equity Section
December 31, 2013
Shareholders’ equity
Preferred stock, $5 par, authorized 1,000,000 shares,
issued and outstanding 1,000,000 shares
Common stock, $.50 par, authorized 10,000,000 shares,
issued 6,058,000 shares, 5,858,000 shares outstanding
Paid-in capital – excess of par
Paid-in capital – share repurchase
Retained earnings
Less: Treasury stock (100,000 shares at cost)
Total shareholders’ equity
Part C, Requirement 3:
NICKLAUS CORPORATION
Statement of Shareholders’ Equity
For the Year Ended December 31, 2013
($ in 000s)
Additional
Total
Preferred
Common
Paid-in
Retained
Treasury
Shareholders’
Stock
Stock
Capital
Earnings
Stock
Equity
January 2, 2013
Issuance of preferred stock
Issuance of common stock
Purchase of treasury stock
Sale of treasury stock
Net income
Common cash dividends
Preferred cash dividends
Stock dividend
December 31, 2013

Leave a Comment