On January 1, 2008, Fredriksen Inc.'s Stockholders' Equity category appeared as follows
prefered stock, $80 par value, 7%
3,000 shares issued and outstanding $ 240,000
Common Stock, $10 par value
15,000 shares issued and outstanding 150,000
additional paid-in-capital-preferred 60,000
additonal paid-in-capital-common 225,000
Total contributed capital 675,000
Retained Earnings 2,100,000
Total stockholders equity 2,775,000
The Preferred stock is noncumulative and nonparticipating. During 2008, the following transactions occurred:
a. On March 1, declared cash dividend of $16,800 on preferred stock. Paid the dividend on April 1.
b. On June 1, declared 55 stock dividend on common stock. The current market price of the common stock was $18. The stock was issued on July 1.
c. On September 1, declared a cash dividend of $0.50 per share on the common stock: paid the dividend on October 1.
d. On December 1, issued a 2-for-1 stock split of common stock when the stock was selling for $50 per share.
1. Explain each transaction's effect on the Stockholders equity accounts and the total stockholders equity
2. Develop the Stockholder's equity category of the December 31, 2008, balance sheet. Assume that the net income for the year was $650,000.
3. Write a paragraph that explain the difference between a stock dividend and a stock split.
The solution discusses the stockholders' equity and transaction's effect.
Classification of Cash Flow Transactions; Indirect Method; Effects of Transaction Ratios
Needing help with three problems, three tabs on attachment.
Classification of Cash Flow Transactions
P 1 Analyze each transaction listed in the table that follows and place X's in the appropriate columns to indicate the transaction's classification and its effect on cash flows using the indirect method.
Statement of Cash Flows: Indirect Method
P 5 Wu Company's income statement for the year ended December 31, 2011, and its comparative balance sheets as of December 31, 2011 and 2010, are presented on the next page. During 2011, Wu Company engaged in these transactions:
Effects of Transactions on Ratios
P 5 Lim Corporation engaged in the transactions listed in the first column of the following table. Opposite each transaction is a ratio and space to indicate the effect of each transaction on the ratio.