The stockholders’ equity section of Ruff Corporation’s balance sheet on December 31, 20x7, follows.

Prepare a statement of stockholders’ equity for the year ended December 31, 20x8, assuming these transactions occurred in sequence in 20x8:

a. Issued 5,000 shares of $100 par value, 9 percent cumulative preferred stock at par after obtaining authorization from the state.

b. Issued 20,000 shares of common stock in connection with the conversion of bonds having a carrying value of $300,000.

c. Declared and issued a 2 percent common stock dividend. The market value on the date of declaration was $14 per share.

d. Purchased 5,000 shares of common stock for the treasury at a cost of $16 per share.

e. Earned net income of $230,000.

f. Declared and paid the full year’s dividend on preferred stock and a dividend of $.40 per share on common stock outstanding at the end of the year.
g. Had foreign currency translation adjustment of minus $50,000.
Journal Entries: Stock Dividends

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Contributed capital Common stock, $2 par value, 250,000 shares authorized, 200,000 shares issued and outstanding Additional paid-in capital Total contributed capital Retained earnings Total stockholders' equity $ 400,000 600,000 $1,000,000 2,100,000 $3,100,000