The following selected accounts appear in the ledger of Parks Construction Inc.
ID: 2430737 • Letter: T
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.
Explanation / Answer
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)