On January 1 2017 Svenberg Inc s Stockholders Equity

category appeared #9005

On January 1, 2017, Svenberg Inc.'s Stockholders' Equity category appeared as
follows:Preferred stock, $80 par value, 8%, 1,000 sharesissued and outstanding
.......................................................$ 80,000Common stock, $10 par value, 10,000 sharesissued
and outstanding ........................................................100,000Additional paid-in capital-Preferred
........................................60,000Additional paid-in capital-Common
.......................................225,000Total contributed capital .....................................................$
465,000Retained earnings .............................................................1,980,000Total stockholders'
equity ..................................................$2,445,000The preferred stock is noncumulative and
nonparticipating. During 2017, the following transactions occurred:a. OnMarch 1, declared a
cash dividend of $6,400 on preferred stock. Paid the dividend on April 1.b. On June 1, declared
an 8% stock dividend on common stock. The current market price of the common stock was
$26. The stock was issued on July 1.c. On September 1, declared a cash dividend of $0.70 per
share on the common stock; paid the dividend on October 1.d. On December 1, issued a 3-for-1
stock split of common stock, when the stock was selling for $30 per share.Required1. Explain
each transaction's effect on the stockholders' equity accounts and the total stockholders'
equity.2. Develop the Stockholders' Equity category of the balance sheet. Assume that the net
income for the year was $720,000.3. Write a paragraph that explains the difference between a
stock dividend and a stock split.View Solution:
On January 1 2017 Svenberg Inc s Stockholders Equity category appeared

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