Question

Chart of Accounts Journal Instructions The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current year Preferred 1% Stock, 350 par (100.000 shares authorized, 79,600 shares issued) Paid-In Capital in Excess of ParPreferred Stock Common Stock, 53 par (5,000 000 shares authorized. 1.870.000 shares issued) Paid-In Capital in Excess of Par-Common Stock Retained Earnings $3,980,000 159,200 5,610 000 1.215,500 31,497,000 During the year, the corporation completed a number of transactions affecting the stockholders equily. They are summarized as follows: 3. Issued 532.900 shares of common stock at 59, receiving cash, b. Issued 11,000 shares of preferred 1% stock at 558. Purchased 45,400 shares of treasury common for 58 per share d Sold 21 400 shares of treasury common for $10 per share Sold 4.300 shares of treasury common for 57 per share Declared cash dividends of 50 50 per share on preferred stock and 5007 per share on common stock 0 Paid the cash dividends All work avec

Answer 1

Journal Entries

a. Cash A/c Dr. 4,796,100

To Common Stock 1,598,700

To Paid in cap in excess of par- common stock 3,197,400

b. Cash A/c Dr. 638,000

To Preferred Stock 550,000

To Paid in cap in excess of par-preferred stock 88,000

c. Treasury Stock A/c Dr. 363,200

To Cash A/c 363,200

d. Cash A/c Dr. 214,000

To Treasury Stock 171,200

To paid in cap in excess of par-treasury stock 42,800

e. Cash A/c Dr. 30,100

Paid in cap in excess of par-treasury stock Dr. 4,300

To Treasury Stock 34,400

f. Retained Earnings Dr. 212,124

To Dividend Payable 212,124

g. Dividend Payable A/c Dr. 212,124

To Bank 212,124

Calculation of Dividend Payable

Outstanding Preference share = 79600+ 11000 = 90,600

Hence, Dividend Payable on preference shares = 90,600 shares * $ 0.50 per share = $45,300

Outstanding Common Stock = 1,870,000 + 532,900 - (45,400 - 21,400 - 4,300) = 2,383,200

Hence, Dividend Payable on common stock = 2,383,200 shares * $ 0.07 per share = $166,824

Total dividend payable = $ 45300 + $ 166824 = $212124

Treasury stock, being shares bought back by the company are not eligible for dividend.