Dividends and Stock Splits On January 1, 2008, Svenberg Inc.’s Stockholders’ Equity category appeared as follows:

The preferred stock is noncumulative and nonparticipating. During 2008, the following transactions occurred:

a. On March 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.
Required 1. 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.

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Preferred stock, $80 par value, 8%, 1,000 shares issued and outstanding Common stock, $10 par value, 10,000 shares issued and outstanding Additional paid-in capital-Preferred Additional paid-in capital-Common Total contributed capital Retained earnings Total stockholders' equity $ 80,000 100,000 60,000 225,000 $ 465,000 1,980,000 $2,445,000