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    Stockholders equity

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    Sands Corporation has the following capital structure at the beginning of the year:

    6% preferred stock, $50 par value, 20,000 shares
    authorized, 6,000 shares issued 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 pf par $110,000

    total paid in capital $810,000
    Retained earnings $340,000

    total stockholders equity $1,150,000

    Instructions:
    a.) Record the following transactions which occurred consecutively (show all calculations).

    1. A total cash dividend of $70,000 was declared and payable to stockholders of record. Record dividends payable on common and preferred stock in separate accounts.

    2. A 10% common stock dividend was declared. The average market value of the common stock is $15 a share.

    3. Assume that net income for the year was $240,000 (record the closing entry).

    b.) What is the balance of the stockholders equity section at the end of the year as a result of these transactions.

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    Solution Summary

    The solution explains some transactions relating to stockholders equity

    $2.49

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