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, 75,100 shares issued)	$3,755,000
Paid-In Capital in Excess of Par—Preferred Stock	165,220
Common Stock, $3 par (5,000,000 shares authorized, 2,020,000 shares issued)	6,060,000
Paid-In Capital in Excess of Par—Common Stock	1,212,000
Retained Earnings	35,446,000

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

Jan.	5	Issued 519,600 shares of common stock at $8, receiving cash.
Feb.	10	Issued 10,800 shares of preferred 1% stock at $61.
Mar.	19	Purchased 46,400 shares of treasury common for $8 per share.
May	16	Sold 20,800 shares of treasury common for $10 per share.
Aug.	25	Sold 5,600 shares of treasury common for $7 per share.
Dec.	6	Declared cash dividends of $0.50 per share on preferred stock and $0.10 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.

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

Answer 1

Journal Entries
Date	Account Title and explanation	Debit	Credit
Jan, 05	Cash (519,600 X $ 8)	$                41,56,800
	To Common Stock(519,600 X $ 3)		$              15,58,800
	To Paid in Capital in Excess of Par - Common Stock (519,600X $ 5)		$              25,98,000
	Cash (10,800 X $ 61)	$                  6,58,800
Feb, 10	To Preferred Stock(10,800 X $ 50)		$                 5,40,000
	To Paid in capital in excess of par - Preferred Stock (10,800 X $11)		$                 1,18,800
Mar, 19	Treasury Stock (46,400 X $ 8)	$                  3,71,200
	To Cash		$                 3,71,200
May, 16	Cash (20,800 X $ 10)	$                  2,08,000
	To Treasurry Stock (20,800 X $ 8)		$                 1,66,400
	To Paid in capital in excess of par - Treasury Stock		$                    41,600
Aug, 25	Cash (5,600 X $ 7)	$                      39,200
	Paid in capital in excess of par - Treasury Stock (5,600 X $ 1)	$                        5,600
	To Treasurry Stock (5,600 X $ 8)		$                    44,800
Dec, 06	Retained Earnings	$                  5,46,870
	To Dividend Payable - common Stock		$                 2,51,960
	To Dividend Payable - Preferred Stock		$                 2,94,910
	Working :
	Common Stock (2,020,000 + 519,600 -46400+20,800+5600) Shares	25,19,600	Shares
	Dividend Per Shares	$                          0.10
	Total Dividend (A)	$                  2,51,960
	Preferred Stock (75,100 + 10,800)=	$                      85,900
	Dividend Per Shares	$                          0.50
	Total Dividend (B)	$                      42,950
	Total Dividend Payable	$                  2,94,910
Dec ,31	Dividend Payable - common Stock	$                  2,51,960
	Dividend Payable - Preferred Stock	$                  2,94,910
	To Cash		$                 5,46,870