Question

Selected Stock Transactions

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

Preferred 2% Stock, $150 par (70,000 shares authorized, 35,000 shares issued)	$5,250,000
Paid-In Capital in Excess of Par—Preferred Stock	840,000
Common Stock, $10 par (700,000 shares authorized, 330,000 shares issued)	3,300,000
Paid-In Capital in Excess of Par—Common Stock	430,000
Retained Earnings	20,818,000

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

1. Issued 70,000 shares of common stock at $16, receiving cash.
2. Issued 18,000 shares of preferred 2% stock at $162.
3. Purchased 42,000 shares of treasury common for $15 per share.
4. Sold 21,000 shares of treasury common for $18 per share.
5. Sold 14,000 shares of treasury common for $13 per share.
6. Declared cash dividends of $3.00 per share on preferred stock and $0.06 per share on common stock.
7. Paid the cash dividends.

Required:

Journalize the entries to record the transactions.

For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Issued 70,000 shares of common stock at $16, receiving cash.

b. Issued 18,000 shares of preferred 2% stock at $162.

c. Purchased 42,000 shares of treasury common for $15 per share..

d. Sold 21,000 shares of treasury common for $18 per share.

e. Sold 14,000 shares of treasury common for $13 per share.

f. Declared cash dividends of $3 per share on preferred stock and $0.06 per share on common stock.

g. Paid the cash dividends.

Answer 1

Journal Entries ($)

A.	Cash Dr (70,000*16)	1,120,000
	To Common Stock		700,000
	To Additional Paid in excess of par-common stock		420,000
	(Issued for cash)
B	Cash Dr	2916,000
	To Preferred Stock		2700,000
	To Additional paid in excess of Par - common stock		216,000
	(issued for cash)
C	Treasury Stock Dr (42000*15)	630,000
	To Cash		630,000
	(Treasury Stock purchased)
D	Cash Dr (21,000*18)	378,000
	To Treasury Stock		315,000
	To Additional paid in excess of par- Common Stock		63,000
	(Treasury stock reissued)
E	Cash Dr (14,000*13)	182,000
	Additional Paid-in excess of par- Common Stock Dr (15-13)*14000	28,000
	To Treasury stock (14000*15)		210,000
	(reissued)
F	Retained Earnings Dr	182580
	To Preference Dividend Payable (35000+18000)*3$		159,000
	To Common Stock Dividend Payable (330,000+70,000-42000+21000+14000)*0.06		23,580
	(dividends declared)
G	Preference dividend payable Dr	159,000
	Common Stock dividend Payable Dr	23580
	To Cash		182580
	(dividends paid)

Note: The preference and common stock dividend payable in above can be clubbed as dividend Payable 182580.