Reference no: EM132453902

Problem - 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, 43,000 shares issued and outstanding 430,000 Paid-in capital in excess of par 102,000 Total paid-in capital 782,000 Retained earnings 448,000 Total stockholders' equity $1,230,000

Required - Record the following transactions which occurred consecutively.

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 $139,000 (record the closing entry) and the board of directors appropriated $66,000 of retained earnings for plant expansion.