Selected Stock Transactions The following selected accounts appear in the ledger
ID: 2599551 • Letter: S
Question
Selected Stock Transactions
The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current year:
During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows:
Issued 60,000 shares of common stock at $14, receiving cash.
Issued 20,000 shares of preferred 2% stock at $190.
Purchased 36,000 shares of treasury common for $11 per share.
Sold 18,000 shares of treasury common for $14 per share.
Sold 12,000 shares of treasury common for $9 per share.
Declared cash dividends of $3.50 per share on preferred stock and $0.06 per share on common stock.
Paid the cash dividends.
Journalize the entries to record the transactions.
For a compound transaction, if an amount box does not require an entry, leave it blank.
Preferred 2% Stock, $175 par (80,000 shares authorized, 40,000 shares issued) $7,000,000 Paid-In Capital in Excess of Par—Preferred Stock 1,120,000 Common Stock, $10 par (600,000 shares authorized, 330,000 shares issued) 3,300,000 Paid-In Capital in Excess of Par—Common Stock 430,000 Retained Earnings 25,122,000Explanation / Answer
Solution.
Date Account Titles Debit Credit a Cash 840,000 Common Stock 600,000 Paid-in Capital in Excess of par 240,000 (Being stock issue on premium) b Cash 3,800,000 Preferred Stock 3,500,000 PIC in Excess of Par 300,000 (Being Preferred stock issue on premium) c Treasury Stock 396,000 Cash 396,000 (Being purchase of treasury stock) d Cash 252,000 Treasury Stock 198,000 PIC from Sale of Treasury Stock 54,000 (Being sale of Treasury stock) e Cash 108,000 PIC from Sale of Treasury Stock 60,000 Treasury Stock 168,000 (Being sale of Treasury stock) f Preferred Dividends 40,000 + 20,000 = 60,000 shares outstanding 60,000 x 3.50 = $210,000 dividends Common Dividends 330,000 + 60,000 - 36,000 + 18,000 + 12,000 = 384,000 shares outstanding 384,000 x 0.06 = $23,040 dividends Cash Dividend 233,040 Cash Dividend payable 233,040 (Being cash dividend payable) Cash Dividend payable 233,040 Cash 233,040 (Being Dividend paid in cash)