Problem 11-5 Dividends and Stock Splits
Problem 11-5 Dividends and Stock Splits
On January 1, 2014, Frederiksen Inc.’s Stockholders’ Equity category appeared as follows:
Preferred stock, $80 par value, 7%,   3,000
shares issued and outstanding                                   $   240,000 Common stock, $10 par value, 15,000  shares
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issued and outstanding
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150,000
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Additional paid-in capital—Preferred
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60,000
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Additional paid-in capital—Common
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225,000
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Total contributed capital
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$Â Â 675,000
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Retained earnings
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2,100,000
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Total stockholders’ equity
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$2,775,000
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The preferred stock is noncumulative and nonparticipating. During 2014, the following transac- tions occurred:
a.     On March 1, declared a cash dividend of $16,800 on preferred stock. Paid the dividend on April 1.
b.     On June 1, declared a 5% 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 stock- holders’ equity.
2.       Develop the Stockholders’ Equity category of the December 31, 2014, balance sheet. Assume that the net income for the year was $650,000.
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3.       Write a paragraph that explains the difference between a stock dividend and a stock split.
Answers
Status NEW
Posted 08 Oct 2017 08:10 PM
My Price 6.00
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Attachments
file 1507494943-Problem 11-5 Dividends and Stock Splits.xlsx preview (427 words )
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