The stockholders equity accounts of Solomon Corporation on J

The stockholders\' equity accounts of Solomon Corporation on January 1, 2016, contained the following balances Preferred Stock (1096, $50 par value, 4,000 shares authorized) $87,500 Issued and Outstanding, 1,750 Shares Paid-in Capital in Excess of Par Value-Preferred 1,750 $ 89,250 Common Stock ($20 par value, 19,000 shares authorized) Issued and Outstanding, 9,500 Shares 190,000 196,200 Retained Earnings Total Stockholders\' Equity $475,450 DATE TRANSACTIONS June 15 Declared a semiannual dividend of 5 percent on preferred stock, payable on July 15 to stockholders of record on June 30 July 15 Paid the dividend on preferred stock. Dec. 15 Declared a semiannual dividend of 5 percent on preferred stock, payable on January 15, 2017, to stockholders of record on December 31, 2016, and a cash dividend of S3.1 per share on common stock, payable on January 15, 2017, to stockholders of record on December 31, 2016. Make separate entries 15 Declared a 15 percent common stock dividend to common stockholders of record on December 31, 2016. The new shares are to be issued on January 15, 2017. A fair value price of $25 per share is expected for the new shares of common stock Dec. 31 Created an \"appropriation of retained earnings for contingencies of $49,000 because of the poor economic outlook. 31 The Income Summary account contained a debit balance of $14,500. The board had anticipated a net loss for the year and no quarterly deposits of estimated income taxes were made, so income taxes may be ignored. 2.1 Record the above transactions in the general journal for 2016. View transaction list Journal entry worksheet

Solution

Solomon Corporation General journal for the year ending December 31, 2016 Date Account Title Debit Credit 6/15/2016 Retained Earnings 4375 Preference dividend payable 4375 (Declaration of semi-annual 5% dividend on $87,500) 7/15/2016 Preference dividend payable 4375 Cash 4375 (Payment of cash dividend delcared on June 15th) 12/15/2016 Retained Earnings 4375 Preference dividend payable 4375 (Declaration of semi-annual 5% dividend on $87,500) 12/15/2016 Retained Earnings 29450 Dividend payable 29450 (Declaration of cash dividend of $3.1 per share of common stock) 12/31/2016 Retained Earnings 35625 Stock dividend distributable 35625 (Declaration of 15% comon stock dividend , @$25 per share) 12/31/2016 Retained Earnings 49000 Retained Earnings, appropriation for contingencies 49000 (Appropriation of retained earnings for contingencies) 12/31/2016 Retained earnings 14500 Income summary 14500 (Net income for the year closed to retained earnings)