Question

Comparative statements of shareholders’ equity for Anaconda International Corporation were reported as follows for the fiscal years ending December 31, 2021, 2022, and 2023.

ANACONDA INTERNATIONAL CORPORATION Statements of Shareholders' Equity For the Years Ended Dec. 31, 2021, 2022, and 2023 ($ in millions) Preferred Common Additional Stock Stock Paid-In $10 par $1 par Capital 45 360 410 48 Retained Earnings 1,574 10 (1) Total Shareholders Equity 1,979 420 54 (1) (11) 210 2,651 (43) (1) (15) (11) 210 10 52 818 (24) Balance at January 1, 2021 Sale of preferred shares Sale of common shares Cash dividend, preferred Cash dividend, common Net income Balance at December 31, 2021 Retirement of shares Cash dividend, preferred Cash dividend, common 3-for-2 split effected in the form of a dividend Net income Balance at December 31, 2022 Common stock dividend Cash dividend, preferred Cash dividend, common Net income Balance at December 31, 2023 (3) 1,772 (16) (1) (15) ол (5) 360 2,952 789 53 п 360 2,100 (59) (1) (17) 392 2,415 (1) (17) 392 3,326 15 54 842

Required:
1. Infer from the statements the events and transactions that affected Anaconda International Corporation’s shareholders’ equity during 2021, 2022, and 2023. Prepare the journal entries that reflect those events and transactions. (Hint: In lieu of revenues and expenses, use an account titled "Income summary" to close net income or net loss.)
2. Prepare the shareholders’ equity section of Anaconda’s comparative balance sheets at December 31, 2023 and 2022.

Infer from the statements the events and transactions that affected Anaconda International Corporation’s shareholders’ equity during 2021, 2022, and 2023. Prepare the journal entries that reflect those events and transactions. (Hint: In lieu of revenues and expenses, use an account titled "Income summary" to close net income or net loss.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Account Titles and Explanation Debit Credit S.No 1 Date 2021 420 10 Preferred Stock Paid in capital in excess of par, preferred (to record sale of preferred stock) 410 2 Cash Common stock Paid in capital in excess of par, Common (to record sale of common stock) 48 Retained Earnings Cash dividends payable, preferred (to record preferred cash dividend payable) 4 Cash Dividends payable, preferred Cash (to record payment of preferred cash dividend) 5 Retained Earnings Cash dividends payable, Common (to record common cash dividend payable) 6 Cash Dividends payable, Common Cash (to record payment of common cash dividend) 210 Income summary Retained Earnings (to record net income close to retained earnings) 210

- 8 2022 Common stock Paid in capital in excess of par, common Retained Earnings Cash (to record retirement of common stocks) 24 16 43 Retained Earnings Cash dividends payable, preferred |(to record preferred cash dividend payable) Cash Dividends payable, preferred Cash |(to record payment of preferred cash dividend) 15 Retained Earnings Cash dividends payable, Common |(to record common cash dividend payable) 15 12 15 Cash Dividends payable, Common Cash |(to record payment of common cash dividend) 15 13 Paid in capital in excess of par, preferred Preferred Stock |(to record 3 for 2 split effected in the form of a dividend) 360 Income summary Retained Earnings (to record net income close to retained earnings) 360

2023 59 Retained Earnings Common stock Paid in capital in excess of par, Common (to record common stock dividend) 53 16 1 Retained Earnings Cash dividends payable, preferred (to record preferred cash dividend payable) 17 | 1 Cash Dividends payable, preferred Cash (to record payment of preferred cash dividend) 18 17 Retained Earnings Cash dividends payable, Common |(to record common cash dividend payable) 17 119 17 Cash Dividends payable, Common Cash (to record payment of common cash dividend) | 17 | 20 392 Income summary Retained Earnings |(to record net income close to retained earnings) 392

ANACONDA INTERNATIONAL CORPORATION Balance Sheet As on December 31 2023 2022 Stockholders' Equity: Preferred Stock Common Stock 48 Additional Paid in Capital 842 789 Retained Earnings 2,415 2,100 Total Stockholders' Equity 3,326 2,952 15 15 54