Selected Stock Transactions The following selected accounts appear in the ledger

Question

Selected Stock Transactions

The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current year:

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

Issued 60,000 shares of common stock at $14, receiving cash.

Issued 20,000 shares of preferred 2% stock at $190.

Purchased 36,000 shares of treasury common for $11 per share.

Sold 18,000 shares of treasury common for $14 per share.

Sold 12,000 shares of treasury common for $9 per share.

Declared cash dividends of $3.50 per share on preferred stock and $0.06 per share on common stock.

Paid the cash dividends.

Journalize the entries to record the transactions.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Preferred 2% Stock, $175 par (80,000 shares authorized, 40,000 shares issued) $7,000,000 Paid-In Capital in Excess of Par—Preferred Stock 1,120,000 Common Stock, $10 par (600,000 shares authorized, 330,000 shares issued) 3,300,000 Paid-In Capital in Excess of Par—Common Stock 430,000 Retained Earnings 25,122,000

Explanation / Answer

Solution.

Date Account Titles Debit Credit a Cash            840,000 Common Stock        600,000 Paid-in Capital in Excess of par        240,000 (Being stock issue on premium) b Cash         3,800,000 Preferred Stock    3,500,000 PIC in Excess of Par        300,000 (Being Preferred stock issue on premium) c Treasury Stock            396,000 Cash        396,000 (Being purchase of treasury stock) d Cash            252,000 Treasury Stock        198,000 PIC from Sale of Treasury Stock          54,000 (Being sale of Treasury stock) e Cash            108,000 PIC from Sale of Treasury Stock               60,000 Treasury Stock        168,000 (Being sale of Treasury stock) f Preferred Dividends 40,000 + 20,000 = 60,000 shares outstanding 60,000 x 3.50 = $210,000 dividends Common Dividends 330,000 + 60,000 - 36,000 + 18,000 + 12,000 = 384,000 shares outstanding 384,000 x 0.06 = $23,040 dividends Cash Dividend            233,040 Cash Dividend payable        233,040 (Being cash dividend payable) Cash Dividend payable            233,040 Cash        233,040 (Being Dividend paid in cash)

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