Problem 145 (Part Level Submission) Foley Corporation has the following capital
ID: 2422505 • Letter: P
Question
Problem 145 (Part Level Submission) Foley Corporation has the following capital structure at the beginning of the year: 4% Preferred stock, $50 par value, 20,000 shares authorized, 6,000 shares issued and outstanding Common stock, $10 par value, 60,000 shares authorized, 38,000 shares issued and outstanding Paid-in capital in excess of par Total paid-in capital Retained earnings Total stockholders' equity 300,000 380,000 108,000 788,000 437,000 $1,225,000 $ (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 O for the amounts.) A total cash dividend of $90,000 was declared and payable to stockholders of record. Record dividends payable on common and preferred stock in separate accounts. A 15% common stock dividend was declared. The average fair value of the common stock is $23 a share. Assume that net income for the year was $148,000 (record the closing entry) and the board of directors appropriated $72,000 of retained earnings for plant expansion. 1. 2. 3.Explanation / Answer
Date Accounts Debit credit 1 Retained earning 90000 Common stock dividend payable [90000-12000] 78000 Preferred stock dividend payable [300,000*.04] 12000 [being cash dividend declared ] 2 Retained earning [38000*.15=5700 shares*23] 131100 common stock distributable [5700*10] 57000 Additional paid in capital [5700*13] 74100 [being stock dividend declared] 3 Income summary 148000 Retained earning [being closing entry to close net income made] Retained earning 72000 Appropriation for plant expansion 72000 [being appropriation for plant expansion made