answer Foley Corporation has the following capital structure at the beginning of the year: 4% Preferred stock. $50 par value, 20.000 shares authorized, 6,000 shares issued and outstanding $300,000 Common stock, $10 par value, 60,000 shares authorized, 40,000 shares issued and outstanding 400,000 Paid-in capital in excess of par 110,000 Total paid-in capital 810,000 Retained earnings 440,000 Total stockholders\' equity $1,250,000 Instructions Record the following transactions which occurred consccutivcly (show all calculations). total cash dividend of $90,000 was declared and payable to stockholders of record. Record dividends on common and preferred stock in separate accounts. A 15% common stock dividend was declared. Ihe average fair value of the common stock is $22 a shore. Assume that net income for the year was $140,000(record the closing entry). Solution Journal entries Foley Corp Sr No Accounts Dr $ Cr$ 1 Retained Earning 90,000 Preference dividend Payable (4% on preferred stock) 12,000 Common stock dividend payable( balance) 78,000 2 Retained Earning 60,000 Common stock dividend payable(15% on common stock) 60,000 3 Profit & Loss A/c 140,000 Reatined earning 140,000.