Construct the stockholders equity section

Assignment Help Accounting Basics

Reference no: EM13148840

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.

Reference no: EM13148840

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