Difference between a stock dividend and a stock split

Assignment Help Financial Accounting

Reference no: EM1312934

Explanation about the main differences between a stock dividend and a stock split.

On January 1, 2007, Frederiksen Inc.'s Stockhlders' Equity category appeared as follows:

Preferred stock, $80 par value, 7%
3000 shares issues and outstanding	$240,000
Common stock, $10 par value,
15,000 shares issued and outstanding	150,000
Additional paid-in capital-Preferred	60,000
Additional paid-in capital-Common	225,000
Total contributed capital	$675,000
Retained earnings	2,100,000
Total stockholders' equity	$2,775,000

The preferred stock is noncumulative and nonparticipating. During 2007, the following transactions occurred:
a)On March 1, declared a cash dividend of $16,800 on preferred stock. Paid the dividend on April 1.
b)On June 1, declared a 5% stock dividend on common stock. The current market price of the common stock was $18. The stock was issued on July 1.
c)On September 1, declared a cash dividend of $0.50 per share on the common stock; paid the dividend on October 1.
d)On December 1, issued a 2-for-1 stock split of common stock, when the stock was selling at $50 per share.

Question:

Write a paragraph that explains the difference between a stock dividend and a stock split.

Reference no: EM1312934

Questions Cloud

Explain capital budgeting involves calculation of modified : Explain Capital budgeting involves calculation of modified internal rate of return and What is the project's modified internal rate of return

Purpose an income statement for the first year : Preparation of Income statement from the given transactions - Purpose an income statement for the first year

Demand function about consumption and aggregate demand : Explain the impacts of an expansionary fiscal policy such as a tax cut on the levels GDP, Consumption, Investment, interest rate and unemployment and price.

Standard deviation of the amount : If the standard deviation of the amount of coffee dispensed is 0.4oz and the amount of coffee dispensed is normally distributed.

Difference between a stock dividend and a stock split : Write a paragraph that explains the difference between a stock dividend and a stock split - Explanation about the main differences between a stock dividend and a stock split.

Explain capital budgeting involves calculation present value : Explain Capital budgeting involves calculation of net present value and is considering the development of one of two mutually exclusive new computer models

Solute showing highest rate of diffusion : Which solute(s) were able to pass through 20 MWCO membrane? In accordance with your results, which solute had the highest molecular weight?

Prepare the stockholders equity category of the december : Prepare the Stockholders Equity category of the December 31, 2007, balance sheet. Assume the net income for the year was $650,000.

Consumption-investment-government purchases : Explain which of the following transactions would be directly counted in 2007's GDP. In each case, explain whether the action causes an increase in Consumption, Investment, Govt. Purchases or Net Export.

User Account

All Pages