On January 1, 2008, Fredericksen Incs.Stockholders Equity category appeared as follows: Preferred stock, $80 par value, 7%,

Question:

On January 1, 2008, Fredericksen 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 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

The preferred stock is noncumulative and nonparticipating. During 2008, the following transactions 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 prior 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-2 stock split of common stock when the stock was selling for $50 per share.

Required

Develop the Stockholders’ Equity category of the December 31, 2008, balance sheet. Assume that the net income for the year was $650,000.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...