Problem
The shareholders' equity section of the balance sheet of National Foods, Inc. included the following accounts at December 31, 2016: Common stock, 120 million shares at $1 par 120 Paid in capital in excess of par, common 836 Retained earnings 2,449 Total Shareholders' Equity 3,405 During 2017, the following transactions affected the stock of National Foods: (a) On March 11, National Foods issued 10 million of its 9.2% preferred shares, $1 par value per share, for $44 per share. (b) On November 22, 1 million common shares, $1 par value per share, were issued in exchange for eight labeling machines. Each machine was built to custom specifications so no cash price was available. National Food's stock was listed at $10 per share. (c ) On November 23, 1 million of the common shares and 1 million preferred shares were sold for $60 million. The preferred shares had not traded since March and their market value was uncertain.
Required:
1. Prepare the appropriate entries for these events.
2. Prepare the shareholders' equity section of the comparative balance sheets for National Foods at December 31, 2017 and 2016. Assume that net income for 2017 was $400 million and the only other transaction affecting shareholders' equity was the payment of the 9.2% dividend on the 11 million preferred shares.