Stockholders' Equity and Transaction's Effect
Not what you're looking for?
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.
Required
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.
Purchase this Solution
Solution Summary
The solution discusses the stockholders' equity and transaction's effect.
Purchase this Solution
Free BrainMass Quizzes
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Operations Management
This quiz tests a student's knowledge about Operations Management
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.