Question
Problem 3. Foley Corporation has the following capital structure at the beginning of the year: Share capitalpreference 5%, $50 par value, 20,000 shares authorized, 6,000
Problem 3.
Foley Corporation has the following capital structure at the beginning of the year:
Share capitalpreference 5%, $50 par value, 20,000 shares authorized,
6,000 shares issued and outstanding $ 300,000
Share capitalordinary, $10 par value, 60,000 shares authorized,
40,000 shares issued and outstanding 400,000
Share premiumordinary 110,000
Retained earnings 440,000
Instructions
Record the following transactions which occurred consecutively.
1. A cash dividend was declared and after a month paid to preference shareholders of record.
2. A $30,000 cash dividend was declared and paid after a month to ordinary shareholders of record.
3. A 10% ordinary share dividend was declare and issued after a month.
4. Purchased 1,200 ordinary shares of to be held as treasury shares, paying $20 per share.
5. Sold 600 of the treasury shares at $25 per share.
6. Sold the remaining treasury shares at $15 per share.
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