National Supply's shareholders' equity included the following accounts at December 31, 2010:
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.
February 15, 2011 Reacquired 300,000 shares at $8 per share.
February 17, 2012 Reacquired 300,000 shares at $5.50 per share.
November 9, 2013 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, 2013, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $14 million in 2011, $15 million in 2012, and $16 million in 2013. No dividends were paid during the three-year period.