The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current year:Preferred 2% Stock, $100 par (100,000 shares authorized, 80,000 shares issued)$8,000,000Paid-In Capital in Excess of Par—Preferred Stock440,000Common Stock, $5 par (5,000,000 shares authorized, 4,000,000 shares issued)20,000,000Paid-In Capital in Excess of Par—Common Stock2,280,000Retained Earnings115,400,000 During the year, the corporation completed a number of transactions affecting the stockholders’ equity. They are summarized as follows:a.Issued 200,000 shares of common stock at $12, receiving cash.b.Issued 8,000 shares of preferred 2% stock at $115.c.Purchased 175,000 shares of treasury common for $10 per share.d.Sold 110,000 shares of treasury common for $14 per share.e.Sold 30,000 shares of treasury common for $8 per share.f.Declared cash dividends of $1.25 per share on preferred stock and $0.08 per share on common stock.g.Paid the cash dividends. Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles.

Workings : F. Cash Dividend Payable (No of shares) Preference stock Common stock…

Answered: The following selected accounts appear…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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

Preferred 2% Stock, $100 par (100,000 shares authorized, 80,000 shares issued)	$8,000,000
Paid-In Capital in Excess of Par—Preferred Stock	440,000
Common Stock, $5 par (5,000,000 shares authorized, 4,000,000 shares issued)	20,000,000
Paid-In Capital in Excess of Par—Common Stock	2,280,000
Retained Earnings	115,400,000

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

a.	Issued 200,000 shares of common stock at $12, receiving cash.
b.	Issued 8,000 shares of preferred 2% stock at $115.
c.	Purchased 175,000 shares of treasury common for $10 per share.
d.	Sold 110,000 shares of treasury common for $14 per share.
e.	Sold 30,000 shares of treasury common for $8 per share.
f.	Declared cash dividends of $1.25 per share on preferred stock and $0.08 per share on common stock.
g.	Paid the cash dividends.

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

Expert Solution

Step 1

Workings :
F.	Cash Dividend Payable	(No of shares)
		Preference stock	Common stock
	Balance , opening	80,000	4,000,000
Add:	Further Issue ( under point A and B)	8,000	200,000
Less:	Purchase (point C)	-	175,000
Add:	Sale (point D)	-	110,000
Add:	Sale (point E)	-	30,000
	No of shares	88,000	4,165,000
	Cash Dividend per share	1.25	0.08
		110,000	333,200
	Total dividend payable = (110,000+333,200)		443,200

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