Kate's business continues to flourish. It hardly seems that just eleven months ago, in September of 2015, that Kate started the business. She is especially pleased that she was able to successfully de fend herself against what turmed out to he a mistaken attempt to sue her for copyright infringement. She was able to clearly demonstrate that her card designs were unique and significantly different from the designs sold by Mega Card Kate has decided to take on an investor. Taylor Kasey helieves that Kate's Cards represents a good investment and wishes to invest money to help Kate expand the business. Kate, however, is somewhat unsure how to structure Taylor's invesiment. Taylor wishes to he an equity investor rather than simply providing a loan to Kate. Kate wants to know whether she should issue Taylor common stock or preferred stock for her investment. I. Discuss the difference between the two classes of stock and suggest which type is more ap- propriate for Kate to issue 2. Kate has decided that she docs not want to give up voting control of Kate's Cards. Since Taylor prefers to be a passive investor, but does wish to have a steady income from dividends, the decision is made to issue 50 shares of $100 par value, 6 percent cumulative preferred stock Provide the journal entry to record the issuance of the preferred stock for cash. 3. Kate also wishes to pay dividends on both her common shares and the preferred stock. She is Explain the difference between a cash dividend and astock dividend. Since Kate is the only stock 4. Kute decides to issue cash dividends on both the common stock and the preferred stock. Currently a little confused between cash and stock dividends holder of the common stock, what would be the effect of issuing a 10 percent stock dividend? there are 50 ttanding preferred shares and 500 common shares outstanding. The dividends that Kate paid were $6 per share on the preferred shares and $2 per share on the common shares Provide the journal entry for the payment of the cash dividends