Foley Corporation has the following capital structure at the beginning of the year: Common stock, $10...

Foley Corporation has the following capital structure at the beginning of the year: Common stock, $10 par value, 400,000 shares authorized, 40,000 shares issued and outstanding 400,000 Paid-in capital in excess of par 110,000 Total paid-in capital $ 510,000 Using the journal paper provided, record the following transactions which occurred consecutively: 1. 8,000 shares of common stock are issued in exchange for land valued at $200,000. The stock is currently selling for $20 per share. 2. 5,000 shares of common stock are sold for cash at $19 per share. 3. A cash dividend of $1.20 per share was declared on the common stock. 4. A 15% common stock dividend was declared. The current market value of the common stock is $18 a share. 5. Bought 350 shares of common stock as treasury shares at $50. 6. Sold all 350 shares of treasury stock at $55. 7. Paid the cash dividend declared in 3. 8. Distributed the stock dividend declared in 4.

Expert Solution

Solution:

Transaction	Accounts and Explanation	Debit	Credit
1	Land	$ 160,000
	Common stock ( 20000*1 )		$ 80,000
	Paid-In-Capital in Excess of Par Value- Common Stock [20000*9 ]		$ 80,000
	(To record Common Stock Issued)

2	Cash	$ 95,000
	Common stock		$ 50,000
	Paid-In-Capital in Excess of Par Value- Common Stock [20000*9 ]		$ 45,000
	(To record Common Stock Issued)

3	Cash Dividend [53000*1.2]	$ 63,600
	Dividend Payable-Common Stock		$ 63,600
	( To record dividend declared)

4	Retained Earnings [5300015%18]	$ 143,100
	Common Stock Dividend Distributable		$ 79,500
	Paid-In-Capital Excess of Par		$ 63,600
	( To record declaration of stock dividend)

5	Treasury Stock	$ 17,500
	Cash		$ 17,500
	(To record Treasury Stock purchased)

6	Cash	$ 19,250
	Treasury Stock		$ 17,500
	Additional Paid-In Cap - Treasury Stock		$ 1,750
	(To record treasury stock resold)


7	Dividend Payable-Common Stock	$ 63,600
	Cash		$ 63,600
	( To record dividend paid)

8	Common Stock Dividend Distributable (1200015%)3	$ 79,500
	Common Stock		$ 79,500
	( To record distribution of common stock)

ekkarill92 answered 1 year ago

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