Problem 1 Sands Corporation has the following capital structure at the beginning of the year 2007: 6% Preferred stock, $50 par value, 20,000 shares authorized, 6,000 shares issued and outstanding $ 300,000 Common stock, $10 par value, 60,000 shares authorized, 40,000 shares issued and outstanding 400,000 Paid-in capital in excess of par 110,000 Total paid-in capital 810,000 Retained earnings 640,000 Total stockholders' equity $1,450,000 Instructions (a) The following additional transactions occurred during the year 2007: March 1 A 30% stock dividend was declared and issued. Market value per share is currently $15. April 1 A two-for-one split was carried out. The par value of the stock was to be reduced to $2.50 per share. Market value on March 31 was $18 per share. July 1 A 15% stock dividend was declared and issued. Market value is currently $10 per share. Aug. 1 A cash dividend of 20 cents per share was declared, payable September 1 to stockholders of record on August 21. Nov. 1 Sands purchased 500 of its outstanding common shares when the market price was $20. Dec. 1 Sands reissued the 500 shares, purchased on Nov. 1, $16 per share Dec 31. Assume that net income for the year was $150,000 and the board of directors appropriated $70,000 of retained earnings for plant expansion. (b) Construct the stockholders' equity section incorporating all the above information.