The following selected accounts appear in the ledger of Parks Construction Inc.
ID: 2579618 • Letter: T
Question
The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current year:
Preferred 2% Stock, $75 par (100,000 shares authorized, 80,000 shares issued) $6,000,000
Paid-In Capital in Excess of Par—Preferred Stock 420,000
Common Stock, $8 par (5,000,000 shares authorized, 3,000,000 shares issued) 24,000,000
Paid-In Capital in Excess of Par—Common Stock 1,850,000
Retained Earnings 115,400,000
During the year, the corporation completed a number of transactions affecting the stockholders’ equity. They are summarized as follows:
Jan. 5 Issued 400,000 shares of common stock at $11, receiving cash.
Feb. 10 Issued 5,000 shares of preferred 2% stock at $90.
Mar. 19 Purchased 150,000 shares of treasury common for $10 per share.
May 16 Sold 80,000 shares of treasury common for $13 per share.
Aug. 25 Sold 20,000 shares of treasury common for $9 per share.
Dec. 6 Declared cash dividends of $1.50 per share on preferred stock and $0.06 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
In the books of Parks Construction Inc.:
Date Account Titles Debit Credit $ $ Jan 5 Cash 4,400,000 Common Stock 3,200,000 Paid-in Caital in Excess of Par : Common Stock 1,200,000 Feb 10 Cash 450,000 Preferred Stock 375,000 Paid-in Capital in Excess of Par : Preferred Stock 75,000 March 19 Treasury Stock 1,500,000 Cash 1,500,000 May 16 Cash 1,040,000 Treasury Stock 800,000 Paid-in Capital : Treasury Stock 240,000 Aug 25 Cash 180,000 Paid-in Capital: Treasury Stock 20,000 Treasury Stock 200,000 Dec 6 Retained Earnings 328,500 Dividends Payable : Preferred Stock 127,500 Dividends Payable : Common Stock 201,000 Dec 31 Dividends Payable : Preferred Stock 127,500 Dividends Payable : Common Stock 201,000 Cash 328,500