Question

... Daley Welding Corporation sells and services pipe welding equipment in Illinois. The following selected accounts appear in the ledger of Daley Welding Corporation on May 1, 2012, the beginning of the current fiscal year: Preferred 2% Stock, $40 par (50,000 shares authorized, 40,000 shares issued) .... ..... $ 1,600,000 Paid-In Capital in Excess of Par-Preferred Stock 240,000 Common Stock, $8 par (1,000,000 shares authorized, 750,000 shares issued)... 6,000,000 Paid-In Capital in Excess of Par--Common Stock ........ 2,500,000 Retained Earnings ... 43,175,000 During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows: a. Purchased 100,000 shares of treasury common for $1,500,000. b. Sold 60,000 shares of treasury common for $1,080,000. c. Issued 8,000 shares of preferred 2% stock at $50. d. Issued 150,000 shares of common stock at $21, receiving cash. e. Sold 25,000 shares of treasury common for $362,500. f. Declared cash dividends of $0.80 per share on preferred stock and $0.11 per share on common stock. g. Paid the cash dividends. Instructions Journalize the entries to record the transactions. Identify each entry by letter.

Answer 1

Answer to question  

Journal in the Books of Daley Welding Corporation
sr. no.	Particulars	Debit	Credit
a	Treasury Common shares A/c	1500000
	To Bank		1500000
	(Being each share of $15 purchased)
b	Bank A/c	1080000
	To Treasury Common shares A/c		900000
	To Profit on sale		180000
	(Being each share of $18 sold)
c	Bank A/c	400000
	To Preferred 2% Stock		400000
	Being issued preferred Stock
d	Bank A/c	3150000
	To Common Stock		3150000
	Being issued common stock
e	Bank A/c	362500
	Loss on sale of Shares	87500
	Treasury Common shares A/c		450000
	(Being loss of $3.5 per Share sale at $14.5)
f	Retained earnings	137400
	To Dividend payable		137400
	Being Common Stock $0.11 per share *750,000 shares + 150,000 shares = $99000 ,Preferred Stock $0.80 per share * 40,000 Shares+ 8000 Shares = $38400
g	Dividend Payable A/c	137400
	To Bank		137400
	(Being Dividend Paid)