The following selected accounts appear in the ledger of Patton Environmental Inc
ID: 2772018 • Letter: T
Question
The following selected accounts appear in the ledger of Patton Environmental Inc. on July 1, 2014, the beginning of the current fiscal year:
During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows:
Issued 50,000 shares of common stock at $32, receiving cash.
Issued 20,000 shares of preferred 2% stock at $167.
Purchased 30,000 shares of treasury common for $870,000.
Sold 15,000 shares of treasury common for $480,000.
Sold 10,000 shares of treasury common for $270,000.
Declared cash dividends of $3.00 per share on preferred stock and $0.12 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, $150 par (80,000 shares authorized, 40,000 shares issued) $6,000,000 Paid-In Capital in Excess of Par—Preferred Stock 960,000 Common Stock, $25 par (500,000 shares authorized,180,000 shares issued) 4,500,000 Paid-In Capital in Excess of Par—Common Stock 590,000 Retained Earnings 25,546,000
Explanation / Answer
Particulars Debit $ Credit $ Cash $ 1,600,000 Common stock $ 1,250,000 Paid in capital $ 350,000 (To record issue of common stock at premium) Cash $ 3,340,000 Preferred stock $ 3,000,000 Paid in capital $ 340,000 (To record issue of preferred stock at premium) Treasury stock $ 870,000 Cash $ 870,000 (To record treasury stock purchase) Cash $ 480,000 Treasury stock $ 435,000 Paid in capital $ 45,000 (To record issue of treasury stock) Cash $ 270,000 Discount on stock issue $ 20,000 Treasury stock $ 290,000 (To record issue of treasury stock) Reatined earnings $ 207,000 Dividends payable $ 207,000 (To record declaration of dividends) Dividends payable $ 207,000 Cash $ 207,000 (To record payment of dividend)