The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current fiscal year: Preferred 2% Stock, $75 par (100,000 shares authorized, 80,000 shares issued) $6,000,000 Paid-In Capital in Excess of Par—Preferred Stock 420,000 Common Stock, $8 par (5,000,000 shares authorized, 3,000,000 shares issued) 24,000,000 Paid-In Capital in Excess of Par—Common Stock 1,850,000 Retained Earnings 115,400,000 During the year, the corporation completed a number of transactions affecting the stockholders’ equity. They are summarized as follows: Jan. 5 Issued 400,000 shares of common stock at $11, receiving cash. Feb. 10 Issued 5,000 shares of preferred 2% stock at $90. Mar. 19 Purchased 150,000 shares of treasury stock for $10 per share. May 16 Sold 80,000 shares of treasury stock for $13 per share. Aug. 25 Sold 20,000 shares of treasury stock for $9 per share. Dec. 6 Declared cash dividends of $1.50 per share on preferred stock and $0.06 per share on common stock. 31 Paid the cash dividends.

Explanation:

Journal Entries - Parks Construction INC.

Date     Particular                          Debit                         Credit

5-JanBank A/c Dr                     $4,400,000.00  

         To Common Stock A/c                                        $3,200,000.00

        To Paid in capital in excess of Par - Common Stock       $1,200,000.00

(Being 400000 share issued of $8 par value for $11 per share)

5-FebBank A/c Dr                      $450,000.00  

          To 2% Preferred Stock                                           $375,000.00

         To Paid in capital in excess of Par - Preferred Stock    $75,000.00

(Being 5000 preference share issued of $75 par value for $90 per share)  

19-MarTreasury Stock A/c Dr     $1,500,000.00  

               To Bank A/                                                               $1,500,000.00

      (Being 150000 shares repurchased at $10 per share)  

16-MayBank A/c Dr (80000*13)$1,040,000.00  

              To Treasury Stock                                                 $800,000.00

             To Additional Paid in Capital                                $240,000.00

      (Being 80000 shares of treasury stock sold at $13 per share)

25-AugBank A/c Dr (20000*9)                 $180,000.00  

              Additional Paid in Capital A/c Dr   $20,000.00  

             To Treasury Stock                                                $200,000.00

          (Being 20000 shares of treasury stock sold at $9 per share)

6-DecRetained Earnings A/c Dr          $328,500.00  

             To Dividend Payable - Preferred                                   $127,500.00

              Stock (85000*1.50)

        To Dividend Payable - Common Stock                                

[(300000+400000-150000+80000+20000)*0.06]           $201,000.00  

31-Dec   Dividend Payable - Preferred Stock Dr    $127,500.00  

             Dividend Payable - Common Stock Dr    $201,000.00  

              To Bank A/c                                                           $328,500.00

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