4. Foley Corporation has the following capital structure at the beginning of the

Question

4. Foley Corporation has the following capital structure at the beginning of the year 5% Preferred stock, $50 par value, 20,000 shares authorized, $ 300,000 6,000 shares issued and outstanding Common stock, $10 par value, 60,000 shares authorized, 40,000 shares issued and outstanding Paid-in capital in excess of par Total paid-in capital Retained earnings Total stockholders' equity 400,000 110,000 810,000 440 000 S1250000 Required: Record the following transactions which occurred consecutively (show all calculations). (a) A total cash dividend of $90,000 was declared and payable to stockholders of record. Record dividends payable on common and preferred stock in separate accounts. (b) A 15% common stock dividend was declared. The average fair value of the common stock is S25 per share.

Explanation / Answer

Account titles & Explanations Debit Credit a) Cash dividend/retained earnings 90,000 Dividends payable-common stock 75,000 dividends payable preferred (300000*5%) 15000 b) Stock dividend/retained earnings (6000*25) 150000 Stock div distributable (6000*10) 60,000 paid in capital in excess of par 90000 (40,000*15%= 6000 shares) since dividends account are closed to retained earnings so I have given the option of debiting retained earnings,so enter answer according to your drop down menu box options

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.