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On January 5, 2018, Parker Corporation received a charter granting the right to issue 6,000 shares...

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Accounting

On January 5, 2018, Parker Corporation received a chartergranting the right to issue 6,000 shares of $100 par value, 7%cumulative and nonparticipating preferred stock, and 60,000 sharesof $10 par value common stock. It then completed thesetransactions:

Jan. 15th. Issued 40,000 shares of common stock at $18 pershare.

Feb. 22nd. Issued to Martinez Corp. 3,000 shares of preferredstock for the following assets: equipment with a fair value of$30,000; a factory building with a fair value of $60,000; and landwith an appraised value of $170,000.

July 23rd. Purchased 2,000 shares of common stock at $20 pershare.

Oct. 10th. Sold the 2,000 treasury shares at $15 per share.

Dec. 31st. Declared a $0.30 per share cash dividend on thecommon stock and declared the preferred dividend.

Prepare all the necessary journal entries for the transactionslisted above for Parker Corporation.

Answer & Explanation Solved by verified expert
3.6 Ratings (562 Votes)

Debit Credit
Jan-15 Cash (40,000*18) $ 720,000.00
Common Stock $ 400,000.00
Paid-in Capital in Excess of Par—Common $ 320,000.00
Feb-22 Equipment $    30,000.00
Factory Building $    60,000.00
Land $ 170,000.00
Discount on Issue of Shares- Preferred $    40,000.00
Preferred Stock $ 300,000.00
Jul-23 Treasury Stock $    40,000.00
Cash $    40,000.00
Oct-10 Cash $    30,000.00
Retained Earnings $    10,000.00
Treasury Stock $    40,000.00
Dec-31 Retained Earnings $    33,000.00
Cash Dividend Payable—Common $    12,000.00
Cash Dividend Payable—Preferred $    21,000.00

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