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 2 years ago

Foley Corporation has the following capital structure at the beginning of the year: 4% Preferred stock,...

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...

Fatahie Corporation has the following capital structure at the beginning of the year: 5% Preferred stock,...

Fatahie Corporation has the following capital structure at the beginning of the year: 5% Preferred stock, $50 par value, 20,000 shares authorized, 6,000 shares issued and outstanding $300,000 Common stock, $10 par value, 60,000 shares authorized, 40,000 shares issued and outstanding 400,000 Paid-in capital in excess of par 110,000 Total paid-in capital 810,000 Retained earnings 440,000 Total stockholders’ equity $1,250,000 Instructions Record the following transactions which occurred consecutively (show all calculations. A total cash dividend of $90,000 was...

The White Corporation has a capital structure of 60 percent common equity, 10 percent preferred stock,...

The White Corporation has a capital structure of 60 percent common equity, 10 percent preferred stock, and 30 percent debt. This capital structure is believed to be optimal. To finance expansion plans over the coming year, the firm expects to have $40 million in retained earnings available. The cost of retained earnings is 18 percent. Additional common equity can be obtained by selling new common stock at a cost of 19.6 percent. Preferred stock can be sold at a cost...

AA corporation has a capital structure consisting of 40% debt, 10% preferred stock, and 50% common...

AA corporation has a capital structure consisting of 40% debt, 10% preferred stock, and 50% common equity. Assume the firm has a sufficient retained earnings to fund the equity portion of its capital budget. It has 20-year, 14% semiannual coupon bonds that sell at their par value of $1,000. The firm could sell, at par, $50 preferred stock that pays a 8% annual dividend. AA’s beta is 1.4, the risk-free rate if 5%, and the market risk premium is 8%....

Mullineaux Corporation has a target capital structure of 41 percent common stock, 4 percent preferred stock,...

Mullineaux Corporation has a target capital structure of 41 percent common stock, 4 percent preferred stock, and 55 percent debt. Its cost of equity is 19 percent, the cost of preferred stock is 6.5 percent, and the pre-tax cost of debt is 7.5 percent. What is the firm's WACC given a tax rate of 34 percent? A. 13.38 percent B. 10.77 percent C. 10.43 percent D. 9.87 percent

1. The target capital structure for a firm is 40% common stock, 10% preferred stock and...

1. The target capital structure for a firm is 40% common stock, 10% preferred stock and 50% debt. If the cost of common equity is 18%, the cost of preferred stock is 10%, the before-tax cost of debt is 8%, and the firm’s tax rate is 35%. What is its weighted average cost of capital? Indicate the detailed steps on how to use a FINANCIAL CALCULATOR to solve the problems.

On July 1, Jones Corporation had the following capital structure. Common stock , par $1 ;...

On July 1, Jones Corporation had the following capital structure. Common stock , par $1 ; 8,000,000 authorized shares, 170,000 issued and outstanding. $170,000 Additional paid in capital. 110,000 Retained Earning ; 190,000 Treasury stock none Case 1 the board of directores feclaredcavd issued 100 percent stick divend when the stock price was $6 per share. Case 2 the board of directors voted 2-1 stock split. The stock price prior to the split was $6 per share Number of outstanding...

Congo Corp. has the following capital structure at the beginning of this year: Preferred shares, $...

Congo Corp. has the following capital structure at the beginning of this year: Preferred shares, $ 3, no par value, cumulative, 20,000 shares authorized, 6,000 shares issued and outstanding$ 300,000 Common shares, no par value, 60,000 shares authorized, 40,000 shares issued and outstanding510,000 Total contributed capital810,000 Retained earnings 340,000 Total shareholders' equity$ 1,150,000 Instructions a)Record the following transactions which occurred consecutively this year. Show all calculations. i.There are no dividends in arrears. A total cash dividend of $ 90,000 was...

Company has the following target capital structure, in market value terms: Debt 30% Preferred Stock 10% Common...

Company has the following target capital structure, in market value terms: Debt 30% Preferred Stock 10% Common Stock 60% In addition, you know the following: · At present the company’s debt is composed of $1,000 par bonds issued exactly three years ago, that pay a semiannual coupon, with a nominal annual rate of 7%, that have a ten-year maturity, and that are now selling for $1,150. · The company’s preferred stock is paying a $1.50 annual dividend and is currently selling...

Assume that the company has the following capital structure: Debt $15,000,000 Preferred stock $7,500,000 Common stock...

Assume that the company has the following capital structure: Debt $15,000,000 Preferred stock $7,500,000 Common stock $27,500,000 What will be the cost of capital if the company decide to raise the needed capital proportionally and with following costs? Please use the following information to calculate the weighted cost of capital: Bond: A 30-year bond with a face value of $1000 and coupon interest rate of 13% and floatation cost of $20 (Tax is 35%) Preferred stock: Face value of $35...

Question