The following selected accounts appear in the ledger of Parks Construction Inc.
ID: 2430755 • 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. Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles.
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)
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)