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In: Accounting

Selected Stock Transactions The following selected accounts appear in the ledger of Parks Construction Inc. at...

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, $200 par (50,000 shares authorized, 25,000 shares issued) $5,000,000
Paid-In Capital in Excess of Par—Preferred Stock 1,000,000
Common Stock, $10 par (500,000 shares authorized, 260,000 shares issued) 2,600,000
Paid-In Capital in Excess of Par—Common Stock 340,000
Retained Earnings 18,953,000

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

Issued 50,000 shares of common stock at $14, receiving cash.

Issued 13,000 shares of preferred 2% stock at $217.

Purchased 30,000 shares of treasury common for $12 per share.

Sold 15,000 shares of treasury common for $15 per share.

Sold 10,000 shares of treasury common for $10 per share.

Declared cash dividends of $4.00 per share on preferred stock and $0.10 per share on common stock.

Paid the cash dividends.

Journalize the entries to record the transactions.

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

Required:

a. Issued 50,000 shares of common stock at $14, receiving cash.

b. Issued 13,000 shares of preferred 2% stock at $217.

c. Purchased 30,000 shares of treasury common for $12 per share.

d. Sold 15,000 shares of treasury common for $15 per share.

e. Sold 10,000 shares of treasury common for $10 per share.

f. Declared cash dividends of $4.00 per share on preferred stock and $0.10 per share on common stock.

g. Paid the cash dividends.

Solutions

Expert Solution

Journal entries :

No Account and explanation debit credit
a Cash (50000*14) 700000
Common Stock (50000*10) 500000
Paid in capital in excess of par value-Common Stock 200000
(To record issue common Stock)
b Cash (13000*217) 2821000
Preferred stock (13000*200) 2600000
Paid in capital in excess of par value-Preferred stock 221000
(To record issue preferred stock)
c Treasury stock (30000*12) 360000
Cash 360000
(To record purchase treasury Stock)
d Cash (15000*15) 225000
Treasury stock (15000*12) 180000
Paid in capital from sale of treasury stock 45000
(To record reissue treasury stock)
e Cash (10000*10) 100000
Paid in capital from sale of treasury stock 20000
Treasury stock (10000*12) 120000
(TO record sale of treasury stock)
f Cash dividend (38000*4+305000*.10) 182500
Dividend payable 182500
(To record cash dividend declared)
g Dividend payable 182500
Cash 182500
(To record dividend paid)

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