Hodge Corporation issued 110,000 shares of $18 par value, cumulative, 8% preferr

Question

Hodge Corporation issued 110,000 shares of $18 par value, cumulative, 8% preferred stock on January 1, 2016, for $2,540,000. In December 2018, Hodge declared its first dividend of $750,000.

Account Titles and Explanation

Debit

Credit

Accounts Payable
Accounts Receivable
Accumulated Depreciation-Buildings
Accumulated Depreciation-Equipment
Allowance for Doubtful Accounts
Bad Debt Expense
Buildings
Cash
Cash Dividends
Common Stock
Common Stock Dividends Distributable
Cost of Goods Sold
Depreciation Expense
Dividends Payable
Equipment
Income Summary
Income Tax Expense
Income Tax Payable
Interest Expense
Interest Payable
Inventory
Land
No Entry
Operating Expenses
Organization Expense
Other Operating Expenses
Paid-in Capital from Treasury Stock
Paid-in Capital in Excess of Par-Common Stock
Paid-in Capital in Excess of Par-Preferred Stock
Paid-in Capital in Excess of Stated Value-Common Stock
Patents
Preferred Stock
Professional Fees
Retained Earnings
Salaries and Wages Expense
Salaries and Wages Payable
Sales Revenue
Service Revenue
Stock Dividends
Supplies
Supplies Expense
Treasury Stock
Unearned Service Revenue

Hodge Corporation issued 110,000 shares of $18 par value, cumulative, 8% preferred stock on January 1, 2016, for $2,540,000. In December 2018, Hodge declared its first dividend of $750,000.

Explanation / Answer

Answer

Account Titles and Explanation

Debit

Credit

Working

Cash

$             25,40,000.00

$                                 -  

[cash received]

Preferred Stock ($18 par)

$                                  -  

$            19,80,000.00

[110,000 shares at $18 par]

Paid in capital in Excess of Par - Preferred Stock

$                                  -  

$              5,60,000.00

[$2,540,000 - $1,980,000]

(preferred stock issued)

Preferred Stock ($18 par)

$             19,80,000.00

Dividend attributable to preferred stock at 8%

$               1,58,400.00

If Preferred Stock is

NOT CUMULATIVE

CUMULATIVE

Total dividend

$               7,50,000.00

$              7,50,000.00

(-) Dividend to preferred stock

$               1,58,400.00

Dividend paid to Common Stockholders

$               5,91,600.00

$              7,50,000.00

Account Titles and Explanation

Debit

Credit

Working

Cash

$             25,40,000.00

$                                 -  

[cash received]

Preferred Stock ($18 par)

$                                  -  

$            19,80,000.00

[110,000 shares at $18 par]

Paid in capital in Excess of Par - Preferred Stock

$                                  -  

$              5,60,000.00

[$2,540,000 - $1,980,000]

(preferred stock issued)

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