Question

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.

Answer 1

For a better format the solution has been attached as an image

However calculaiton and contruction of the equity statement information is provided

Step-by-step explanation:

Common Stock:

we have 3,000,000 at $8

then we issue for 400,000 again at $8

Additional CS

we had 1,850,000 then, we add the 400,000 x (11 - 8) of the issuance

Preferred stock same procedure

we aadd the par value of the issuance: 5,000 x $75

the additional ($90 - $75) x 5,000

Treasury stock is negative as it represnet a deduction in the outstanding equity

we report at cost and we make the deduction at cost

150,000 shares x $10

Then we have

80,000 x $10

and 20,0000 x $10

Additional:

80,000 x ( 13 - 10)

it decrease in the second sale as proceeds are less than cost:

80,000 x ( 9 - 10)

Retained Earnings:

Dividends:

Preferred shares:

80,000+ 5,000 issued = 85,000 x 1.5 each

Common Shares:

3,000,000 + 400,000 issued - 50,000 treasury = 3,350,000

times 0.06 each

Answer 2

Step-by-step explanation:

Journal Entries - Parks Construction INC.

Date Particular Debit Credit

5-Jan Bank 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-Feb Bank 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-Mar Treasury Stock A/c Dr $1,500,000.00

To Bank A/ $1,500,000.00

(Being 150000 shares repurchased at $10 per share)

16-May Bank 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-Aug Bank 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-Dec Retained 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