TOPIC 4: PROBLEM 1 Corporate Equity Transactions Samantha Martinez incorporated a corporation named Sam's Stuffed Pizza, Inc. (SSPI). The Articles of Incorporation indicated that the authorized number of common shares is 100,000 and authorized 20,000 of preferred stock. The par value of the common stock is $1.00. The par value of the preferred stock is $10.00. A. What transaction will SSPI record when it sells 1,000 newly issued shares of common stock for $17,500? B. What would be the price per share of common stock, that SSPI received? C. Why would someone pay more than a $1.00 for a share of common stock? Here is what the equity part of the balance sheet looks like after being in business for a year. Common Stock................ $ 50,000 Additional Paid In Capital....... 200,000 Retained Earnings........... 100,000 Total Shareholder's Equity $350,000 The Board of Directors declares an 8% common stock dividend at the end of the year. What is the journal entry that records the dividend? 1 words How did the dividend affect Total Shareholder's Equity? D. The preferred stock had a 7% annual dividend and was cumulative. How much was the annual dividend on one share of preferred stock? What does cumulative mean in this case? Why do corporations sell preferred stock as well as common stock? Save Submit