Question

The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current fiscal year:

Preferred 1% Stock, $50 par (100,000 shares authorized, 79,600 shares issued)	$3,980,000
Paid-In Capital in Excess of Par—Preferred Stock	159,200
Common Stock, $3 par (5,000,000 shares authorized, 1,870,000 shares issued)	5,610,000
Paid-In Capital in Excess of Par—Common Stock	1,215,500
Retained Earnings	31,497,000

During the year, the corporation completed a number of transactions affecting the stockholders’ equity. They are summarized as follows:

Jan.	5	Issued 532,900 shares of common stock at $9, receiving cash.
Feb.	10	Issued 11,000 shares of preferred 1% stock at $58.
Mar.	19	Purchased 45,400 shares of treasury stock for $8 per share.
May	16	Sold 21,400 shares of treasury stock for $10 per share.
Aug.	25	Sold 4,300 shares of treasury stock for $7 per share.
Dec.	6	Declared cash dividends of $0.50 per share on preferred stock and $0.07 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.

Answer 1

Journal entries

Date	account and explanation	debit	credit
Jan 5	Cash (532900*9)	4796100
	Common Stock (532900*3)		1598700
	Paid in capital in excess of par-Common Stock		3197400
	(To record issue common stock)
Feb 10	Cash (11000*58)	638000
	Preferred stock (11000*50)		550000
	Paid in Capital in excess of par-Preferred stock		88000
	(To record issue preferred stock)
Mar 19	Treasury Stock (45400*8)	363200
	Cash		363200
	(To record purchase treasury stock)
May 16	Cash	214000
	Treasury stock (21400*8)		171200
	Paid in Capital from sale of treasury stock		42800
	(To record reissue treasury stock)
Aug 25	Cash (4300*7)	30100
	Paid in capital from sale of treasury stock	4300
	Treasury stock		34400
	(To record sale of treasury stock)
Dec 6	Dividend-Preferred	45300
	Dividend-Common	166824
	Dividend payable		212124
	(To record dividend declared)
Dec 31	Dividend payable	212124
	cash		212124
	(To record dividend paid)