Question

Foley Corporation has the following capital structure at the beginning of the year:

4% Preferred stock, $50 par value, 20,000 shares authorized, 5,000 shares issued and outstanding		$250,000
Common stock, $10 par value, 60,000 shares authorized, 42,000 shares issued and outstanding		420,000
Paid-in capital in excess of par		117,000
Total paid-in capital		787,000
Retained earnings		439,000
Total stockholders' equity		$1,226,000

(a)

(a)

Record the following transactions which occurred consecutively. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

1.		A total cash dividend of $75,000 was declared and payable to stockholders of record. Record dividends payable on common and preferred stock in separate accounts.
2.		A 15% common stock dividend was declared. The average fair value of the common stock is $22 a share.
3.		Assume that net income for the year was $148,000 (record the closing entry) and the board of directors appropriated $65,000 of retained earnings for plant expansion.

No.	Account Titles and Explanation	Debit	Credit
1.
2.
3.
	(To record the closing entries.)

Answer 1

Answer
No	Account Title and Explanation	Debit	Credit
1	Retained Earnings	$   75,000
	Dividends payable - common stock		$   65,000
	Dividends payable - preferred stock		$   10,000
	(To record cash dividend payable on common stock and preferred stock)
2	Retained Earnings (6300*22)	$1,38,600
	Common stock		$   63,000
	Paid in capital in excess of par - Common stock		$   75,600
	(To record stock dividend payable on common stock )
3	Income Summary	$1,48,000
	Retained Earnings		$1,48,000
	(To record closing entries)
	Retained Earnings	$       65,000
	Retained Earnings appropriated on plant expansion		$       65,000
	(To record appropriation of retained earnings on plant expansion)
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