Question

Problem 145 (Part Level Submission)
Foley Corporation has the following capital structure at the beginning of the year:

4% Preferred stock, $50 par value, 20,000 shares authorized, 5,000 shares issued and outstanding $250,000
Common stock, $10 par value, 60,000 shares authorized, 38,000 shares issued and outstanding 380,000
Paid-in capital in excess of par 108,000
Total paid-in capital 738,000
Retained earnings 450,000
Total stockholders' equity $1,188,000
       (a)
Record the following transactions which occurred consecutively. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

1. A total cash dividend of $75,000 was declared and payable to stockholders of record. Record dividends payable on common and preferred stock in separate accounts.
2. A 15% common stock dividend was declared. The average fair value of the common stock is $21 a share.
3. Assume that net income for the year was $132,000 (record the closing entry) and the board of directors appropriated $74,000 of retained earnings for plant expansion.

Answer 1

	Accounts and Explanation	Amount	Amount
1	Retained earnings	$75,000.00
	Preferred stock dividend ($250000*4%)		$10,000.00
	Common stock dividend		$65,000.00
	( To record the declaration of preferred and common stock dividend)
2	Retained earnings (38,000*15%*$21)	$119,700.00
	Common stock dividend distributable (38000*15%*10)		$57,000.00
	Paid in capital in excess of par (38000*15%*11)		$62,700.00
	( To record dividend declared)
3	Income summary	$132,000.00
	Retained earnings		$132,000.00
	( To record the closing entry)
	Retained earnings	$74,000.00
	plant expansion		$74,000.00
	( To record the appropriation of retained earnings to plant expansion)