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, 79,600 shares issued)	$3,980,000
Paid-In Capital in Excess of Par—Preferred Stock	159,200
Common Stock, $3 par (5,000,000 shares authorized, 1,870,000 shares issued)	5,610,000
Paid-In Capital in Excess of Par—Common Stock	1,215,500
Retained Earnings	31,497,000

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

a.	Issued 532,900 shares of common stock at $9, receiving cash.
b.	Issued 11,000 shares of preferred 1% stock at $58.
c.	Purchased 45,400 shares of treasury common for $8 per share.
d.	Sold 21,400 shares of treasury common for $10 per share.
e.	Sold 4,300 shares of treasury common for $7 per share.
f.	Declared cash dividends of $0.50 per share on preferred stock and $0.07 per share on common stock.
g.	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

Answer:

Basis	Particulars	Debit	Credit
A.	Cash	$            4796100
	common stock		$        1598700
	Paid in capital in excess of par - common stock		$        3197400
	(Being shares issued and cash received)
B.	Cash	$              638000
	Preferred stock		$          550000
	Paid in capital in excess of par - preferred stock		$              88000
	(Being shares issued and cash received)
C.	Treasury Stock	$            363200
	Cash		$        363200
	(Being 45400 shares of treasury common stock purchased @ $ 8)
D.	Cash	$            214000
	Treasury Stock		$          171200
	Paid in capital from sale of - Treasury stock		$          42800
	(Being 21400 shares of treasury common stock sold @ $ 10)
E.	Cash	$              30100
	Paid in capital from sale of - Treasury stock	$                  4300
	Treasury Stock		$          34400
	(Being 4300 shares of treasury common stock sold @ $ 7)
F.	Cash Dividend	$              529400
	Cash Dividend Payable		$          529400
	(Being Cash dividend due for payment)
G.	Cash Dividend Payable	$              529400
	Cash		$          529400
	(Being cash dividend paid)
Workings :
A.	Cash =	(532900X $9)	$        4796100
	common stock =	(532900X $3)	$        1598700
	Paid in capital in excess of par - common stock =	(532900X $6)	$        3197400
B.	Cash =	(1000 X $58)	$          638000
	Preferred stock =	(11000 X $50)	$          550000
	Paid in capital in excess of par - preferred stock =	(11000 X $8)	$              88000
C.	Treasury Stock =	(45400 X $8)	$        363200
D.	Cash =	(21400 X $10)	$        214000
	Treasury Stock =	(21400 X $8)	$          171200
	Paid in capital from sale of - Treasury stock =	(21400 X $2)	$          42800
E.	Cash =	(4300 X $7)	$          30100
	Paid in capital from sale of - Treasury stock =	(4300 X $1)	$              4300
	Treasury Stock =	(4300 X $8)	$          34400
F.	Cash Dividend Payable =	(No of shares)
		Preference stock	Common stock
	Balance , opening	21400	1870000
Add:	Further Issue ( under point A and B)	11000	532900
Less:	Purchase (point C)	-	-45400
Add:	Sale (point D)	-	21400
Add:	Sale (point E)	-	4300
	No of shares	32400	2383200
	Cash Dividend per share	$                       0.50	$                  0.07
		$              16200	$          166824
	Total dividend payable = ($ 16200+ 513200)	=	$          529400