The following selected accounts appear in the ledger of EJ Construction Inc. at
ID: 2473136 • Letter: T
Question
The following selected accounts appear in the ledger of EJ Construction Inc. at the beginning of the current fiscal year: Preferred 1% Stock, $50 par (100,000 shares authorized, 80,000 shares issued)........$4,000,000 Paid-In Capital in Excess of Par-Preferred Stock............175000 Common Stock, $3 par (5,000,000 shares authorized, 2,000,000 shares issued)...........6.000,000 Paid-In Capital in Excess of Par-Common Stock.........1,500,000 Retained Earnings.......2,350,000 During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows: Issued 500,000 shares of common stock at $8, receiving cash. Issued 10,000 shares of preferred 1% stock at $60. Purchased 50.000 shares of treasury common for $7 per share. Sold 20,000 shares of treasury common for $9 per share. Sold 5,000 shares of treasury common for $6 per share Declared cash dividends of $0.50 per share on preferred stock and $0.08 per share on common stock. Paid the cash dividends. Instructions Journalize the entries to record the transactions. Identify each entry by letter.Explanation / Answer
Journal entries
Serial
No.
*Preferred dividend;
80000+10000=90000 preferred share outstanding
Preferred dividend=90000×.50=45000
Common stock;
2000000+500000-500000+20000+5000=2475000 common share outstanding
Dividend=2475000×.08=198000
Total dividend=198000+45000=243000
Serial
No.
Account titles debit credit a cash 4000000 Common stock 1500000 Paid in capital in excess of par-common stock 2500000 b cash 600000 Preferred stock 500000 Paid in capital excess of par-preferred stock 100000 c. Treasury stock 350000 Cash 350000 d cash(20000×9) 180000 Treasury stock(20000×7) 140000 Paid in capital from sale of treasury stock(20000×7) 40000 e. Cash(5000×6) 30000 Paid in capital from sale of treasury stock(5000×1) 5000 Treasury stock(5000×7) 35000 f cash dividend 243000* Cash dividend payable 243000 g cash dividend payable 243000 Cash 243000