The following selected accounts appear in the ledger of EJ Construction Inc. at

Question

The following selected accounts appear in the ledger of EJ Construction Inc. at 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:

Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles.

Preferred 1% Stock, $50 par (100,000 shares authorized, 79,500 shares issued) $3,975,000 Paid-In Capital in Excess of Par—Preferred Stock 151,050 Common Stock, $3 par (5,000,000 shares authorized, 2,460,000 shares issued) 7,380,000 Paid-In Capital in Excess of Par—Common Stock 1,722,000 Retained Earnings 34,910,000

Explanation / Answer

Working for Dividend

Issued 521,500 shares of common stock at $9, receiving cash. Dr Cr Cash ( 521500 x 9) 4693500 Common Stock (521500 x 3 ) 1564500 Paid-In Capital in Excess of Par—Common Stock 3129000 Issued 9,100 shares of preferred 1% stock at $59. Dr Cr Cash ( 9100 x 59) 536900 Preferred Stock( 92100 x 50) 455000 Paid-In Capital in Excess of Par—Preferred Stock 81900 Purchased 51,600 shares of treasury common for $6 per share. Dr Cr Treasury Stock (( 51600 x 6 ) 309600 Cash ( 51600 x 6 ) 309600 Sold 18,700 shares of treasury common for $8 per share. Dr Cr Cash ( 18700 x 8 ) 149600 Treasury Stock (( 18700 x 6 ) 112200 Paid-In Capital from Treasury Stock 37400 Sold 4800 shares of treasury common for $5 per share. Dr Cr Cash (4800 x 5 ) 24000 Paid-In Capital from Treasury Stock (loss) 3000 Treasury Stock (( 4500 x 6 ) 27000 Declared cash dividends of $0.50 per share on preferred stock and $0.06 per share on common stock. Dr Cr Retained Earnings 2393890 Dividiends payable 2393890 Paid the cash dividends. Dr Cr Dividiends payable 2393890 Cash 2393890

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