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, 75,100 shares issued) $3,755,000 Paid-In Capital in Excess of Par—Preferred Stock 165,220 Common Stock, $3 par (5,000,000 shares authorized, 1,690,000 shares issued) 5,070,000 Paid-In Capital in Excess of Par—Common Stock 1,014,000 Retained Earnings 30,836,000 During the year, the corporation completed a number of transactions affecting the stockholders’ equity. They are summarized as follows: Jan. 5 Issued 454,700 shares of common stock at $8, receiving cash. Feb. 10 Issued 11,800 shares of preferred 1% stock at $61. Mar. 19 Purchased 46,500 shares of treasury common for $8 per share. May 16 Sold 20,700 shares of treasury common for $10 per share. Aug. 25 Sold 5,700 shares of treasury common for $7 per share. Dec. 6 Declared cash dividends of $0.50 per share on preferred stock and $0.10 per share on common stock. 31 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

Journal Entries (Amounts in $)

Date	Account Titles and Explanations	Debit	Credit
Jan. 5	Cash (454,700 shares*$8)	3,637,600
	Common Stock (454,700 shares*$3 par)		1,364,100
	Paid-In Capital in Excess of Par-Common Stock (bal fig) (3,637,600 - 1,364,100)		2,273,500
	( To record issue of common stock)
Feb. 10	Cash (11,800 shares*$61 )	719,800
	Preferred 1% Stock (11,800 shares*$50 par)		590,000
	Paid-In Capital in Excess of Par-Preferred Stock (Bal fig) (719,800-590,000)		129,800
	(To record issue of Preferred Stock)
Mar. 19	Treasury Stock (46,500 shares*$8)	372,000
	Cash		372,000
	(To record the purchase of treasury stock)
May 16	Cash (20,700 shares*$10)	207,000
	Treasury Stock (20,700 shares*$8 cost)		165,600
	Paid-In Capital from Treasury Stock (Bal fig) (207,000-165,600)		41,400
	(To record the sale of treasury stock)
Aug. 25	Cash (5,700 shares*$7)	39,900
	Paid-In Capital from Treasury Stock (Bal fig) (5,700*$1)	5,700
	Treasury Stock (5,700 shares*$8 cost)		45,600
	(To record the sale of treasury stock)
Dec. 6	Cash dividends [(1,690,000+454,700-46,500+20,700+5,700) shares outstanding*$0.10 per share]	212,460
	Cash dividends payable		212,460
	(To record the cash dividends declared on common stock)
Dec. 6	Cash dividends [(75,100+11,800) shares*$0.50]	43,450
	Cash dividends payable		43,450
	(To record the cash dividends declared on Preferred stock)
Dec. 31	Cash dividends payable (212,460+43,450)	255,910
	Cash		255,910
	(To record the payment of cash dividends)