problem SP11

Preferred Stock, $50 Par Paid-in Capital from Treasury Stock 75,000 Paid-in Capital in Excess of Par Value-Preferred Stock 1,360 15,000 Treasury Stock (4) (900 shares 5,120 of common) Common Stock, $10 Par 40,000 50,000 12,800 Required s information, give detailed descriptions, including number of shares and price when applicable, for each of the five transactions. SERIAL PROBLEM: KATE'S CARDS Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters I through 10.) SPI. Kate's business continues to flourish. It hardly seems that just eleven months ago, in S n September 2015, that Kate started the business. She is especially pleased that she was able to successful fend herself against what turned out to be a mistaken attempt to sue her for copyright infr y de. ingement. e to clearly demonstrate that her card designs were unique and significantly di fferent from the designs sold by Mega Cards Kate has decided to take on an investor. Taylor Kasey believes that Kate's Cards represento good investment and wishes to invest money to help Kate expand the business. Kate, however somewhat unsure how to structure Taylor's investment. Taylor wishes to be an equity investor rath represents a 18 er than simply providing a loan to Kate. Kate wants to know whether she should issue Taylor common stock or preferred stock for her investment. 1. Discuss the difference between the two classes of stock and suggest which type is more propriate for Kate to issue Kate has decided that she does 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. 2. 3. Kate also wishes to pay dividends on both her common shares and the preferred stock. She is a little confused between cash and stock dividends. Explain the difference between a cash dividend and a stock dividend. Since Kate is the only stock- holder of the common stock, what would be the effect of issuing a 10 percent stock dividend? 4. Kate decides to issue cash dividends on both the common stock and the preferred stock. Currently there are 50 outstanding preferred shares and 500 common shares outstanding. The dividends tha 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