National Supply’s shareholders’ equity included the following accounts at December 31, 2023:

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.

2. Prepare the shareholders’ equity section of National Supply’s balance sheet at December 31, 2026, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $14 million in 2024, $15 million in 2025, and $16 million in 2026. No dividends were paid during the three-year period.

Transcribed Image Text:

Shareholders' Equity Common stock, 6 million shares at $1 par Paid-in capital-excess of par Retained earnings $ 6,000,000 30,000,000 86,500,000