Comparative statements of shareholders equity for Anaconda I

Comparative statements of shareholders’ equity for Anaconda International Corporation were reported as follows for the fiscal years ending December 31, 2018, 2019, and 2020.

Required:
1. Infer from the statements the events and transactions that affected Anaconda International Corporation’s shareholders’ equity during 2018, 2019, and 2020. Prepare the journal entries that reflect those events and transactions.
2. Prepare the shareholders’ equity section of Anaconda’s comparative balance sheets at December 31, 2020 and 2019.

ANACONDA INTERNATIONAL CORPORATION Statements of Shareholders\' Equity For the Years Ended Dec. 31, 2018, 2019, and 2020 ($ in millions)
	Preferred Stock $10 par		Common Stock $1 par		Additional Paid-In Capital		Retained Earnings		Total Shareholders\' Equity
Balance at January 1, 2018				75				450				1,904				2,429
Sale of preferred shares	30							960								990
Sale of common shares				9				54								63
Cash dividend, preferred												(3	)			(3	)
Cash dividend, common												(19	)			(19	)
Net income												360				360
Balance at December 31, 2018	30			84				1,464				2,242				3,820
Retirement of shares				(4	)			(24	)			(20	)			(48	)
Cash dividend, preferred												(3	)			(3	)
Cash dividend, common												(23	)			(23	)
3-for-2 split effected in the form of a dividend	15							(15	)
Net income												510				510
Balance at December 31, 2019	45			80				1,425				2,706				4,256
Common stock dividend				7				47				(54	)
Cash dividend, preferred												(3	)			(3	)
Cash dividend, common												(25	)			(25	)
Net income												552				552
Balance at December 31, 2020	45			87				1,472				3,176				4,780

Solution

JOURNAL ENTRY Year Account Title Debit Credit 2018 Cash $990,000,000 Preferred stock $30,000,000 ($10 per share) Additional paid in capital-Preferred stock $960,000,000 ($320 per share) (To record Issue of 3 million preferred shares at $330 per share) 2018 Cash $63,000,000 Common Stock $9,000,000 ($1 per share) Additional paid in capital-Common Stock $54,000,000 ($6 per share) (To record issue of 9million common shares at $7 each) 2018 Retained earnings $3,000,000 Cash $3,000,000 (To record payment of cash dividend of $1 per preferred share) 2018 Retained earnings $19,000,000 Cash $19,000,000 (To record payment of cash dividend for common stock) 2018 Net Income $360,000,000 Retained Earnings $360,000,000 (To transfer net income to retained earnings) 2019 Common Stock $4,000,000 Additional Paid up Capital $24,000,000 Retained earnings $20,000,000 Cash $48,000,000 ( To recordv retirement of 4 million common shares) 2019 Retained earnings $3,000,000 Cash $3,000,000 (To record payment of cash dividend of $1 per preferred share) 2019 Retained earnings $23,000,000 Cash $23,000,000 (To record payment of cash dividend for common stock) 2019 Retained Earnings $15,000,000 Preferred stock $15,000,000 (To recordv 3 for 2 split effected in the form of dividend) 2019 Net Income $510,000,000 Retained Earnings $510,000,000 (To transfer net income to retained earnings) 2020 Retained earnings $54,000,000 Common Stock $7,000,000 Additional Paid in Capital $47,000,000 (To record stock dividend on Common Shares) 2020 Retained earnings $3,000,000 Cash $3,000,000 (To record payment of cash dividend of $1 per preferred share) 2020 Retained earnings $25,000,000 Cash $25,000,000 (To record payment of cash dividend for common stock) 2020 Net Income $552,000 Retained Earnings $552,000 (To transfer net income to retained earnings) SHAREHOLDERS EQUITY SECTION .Dec31, 2010 .Dec31,2019 Preferred Stock,$10 par Value,4,500,000shares authorised issued and outstanding $45,000,000 $45,000,000 Common stock, $1 par value 87,000,000shares issued ands outstanding $87,000,000 $80,000,000 Additional paid in capital $1,472,000,000 $1,425,000,000 Retained earnings $3,176,000,000 $2,706,000,000 Total stockholders equity $4,780,000,000 $4,256,000,000