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Q1) On January 1, 2007, Frederiksen Inc.'s Stockhlders' Equity category appeared as follows:

Preferred stock, $80 par value, 7%
 
3000 shares issues and outstanding
$240,000
Common stock, $10 par value,
 
15,000 shares issued and outstanding
150,000
Additional paid-in capital-Preferred
60,000
Additional paid-in capital-Common
225,000
Total contributed capital
$675,000
Retained earnings
2,100,000
Total stockholders' equity
$2,775,000

Preferred stock is noncumulative and nonparticipating. In 2007, following transactions occurred:

a) On March 1, declared cash dividend of $16,800 on preferred stock. Paid dividend on April 1.

b) On June 1, declared a 5% stock dividend on common stock. Current market price of common stock was $18. The stock was issued on July 1.

c)On September 1, declared cash dividend of $0.50 per share on common stock; paid dividend on October 1.

d)On December 1, issued a 2-for-1 stock split of common stock, when stock was selling at $50 per share.

problem:

prepare a paragraph which describes difference between stock dividend and stock split.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M920868

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