Question

Prepare journal entries for stockholders' equity transactions

A partial list of the ledger accounts of Skyway Corporation is shown below, followed by a list of transactions. Indicate the accounts that would be debited and credited in recording each transaction.

1 cash

2 land

3 organization costs

10 dividends payable

20 preferred stock, 100 par

21 common stock $10 par

25 additional paid in capital

26 dontated capital

30 retained earnings

40 income summary

	Transactions	Account(s) Debited	Account(s) Credited
	Example: Issued preferred stock for cash at a price above par.	1	20, 25
(a)	Declared a cash dividend on common stock.
(b)	10,000 shares of $10 par common stock are issued in exchange for land appraised at $1 million.
(c)	Paid attorney for services relating to formation of the corporation.
(d)	Shares of common stock are sold for cash at a price above par.
(e)	The dividend declared in (a), above, is paid.
(f)	Income Summary account is closed at the end of a profitable period.
(g)	Land is donated to the corporation by the City of Chicago.

Answer 1

	Transactions	Account(s) Debited	Account(s) Credited
	Example: Issued preferred stock for cash at a price above par.	1	20, 25
(a)	Declared a cash dividend on common stock.	30	10
(b)	10,000 shares of $10 par common stock are issued in exchange for land appraised at $1 million.	2	21,25
(c)	Paid attorney for services relating to formation of the corporation.	3	21,25
(d)	Shares of common stock are sold for cash at a price above par.	1	21,25
(e)	The dividend declared in (a), above, is paid.	10	1
(f)	Income Summary account is closed at the end of a profitable period.	40	30
(g)	Land is donated to the corporation by the City of Chicago.	26	2