Question

The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current year:

Preferred 1% Stock, $50 par (100,000 shares authorized, 83,900 shares issued)	$4,195,000
Paid-In Capital in Excess of Par—Preferred Stock	184,580
Common Stock, $3 par (5,000,000 shares authorized, 2,120,000 shares issued)	6,360,000
Paid-In Capital in Excess of Par—Common Stock	1,590,000
Retained Earnings	31,692,000

During the year, the corporation completed a number of transactions affecting the stockholders’ equity. They are summarized as follows:

Jan.	5	Issued 467,700 shares of common stock at $9, receiving cash.
Feb.	10	Issued 10,700 shares of preferred 1% stock at $62.
Mar.	19	Purchased 53,000 shares of treasury common for $6 per share.
May	16	Sold 20,000 shares of treasury common for $8 per share.
Aug.	25	Sold 5,200 shares of treasury common for $5 per share.
Dec.	6	Declared cash dividends of $0.50 per share on preferred stock and $0.10 per share on common stock.
	31	Paid the cash dividends.

Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Solution:

Park Construction Inc.- Journal Entries
Date	Particulars	Debit	Credit
5-Jan	Cash Dr	$4,209,300.00
	To Common stock		$1,403,100.00
	To Paid in capital in excess of Par - Common stock		$2,806,200.00
	(To record issue of common stock)
10-Feb	Cash Dr	$663,400.00
	To Common stock		$535,000.00
	To Paid in capital in excess of Par - Preferred stock		$128,400.00
	(To record issue of Preferred stock)
19-Mar	Treasury stock Dr	$318,000.00
	To Cash		$318,000.00
	(To record purchase of treasury stock)
16-May	Cash A/c Dr	$160,000.00
	To Treasury Stock		$120,000.00
	To Paid in capital from Treasury stock		$40,000.00
	(To record sale of treasury stock)
25-Aug	Cash A/c Dr	$26,000.00
	Paid in capital from Treasury stock Dr	$5,200.00
	To Treasury Stock		$31,200.00
	(To record sale of treasury stock)
6-Dec	Retained Earnings Dr (94600*$0.50 + 2559900*$0.10)	$303,290.00
	To Dividend payable		$303,290.00
	(Being dividend declared)
31-Dec	Dividend Payable Dr	$303,290.00
	To Cash		$303,290.00
	(Being dividend paid)