Disclosure of the balance sheet after the dividend issue and stock split.
On January 1, 2007, Frederiksen Inc.Stockhlders Equity category appeared as follows:
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Preferred stock, $80 par value, 7%
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3000 shares issues and outstanding
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$240,000
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Common stock, $10 par value,
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15,000 shares issued and outstanding
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150,000
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Additional paid-in capital-Preferred
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60,000
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Additional paid-in capital-Common
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225,000
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Total contributed capital
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$675,000
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Retained earnings
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2,100,000
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Total stockholders' equity
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$2,775,000
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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:
Develop the Stockholders Equity category of the December 31, 2007, balance sheet. Assume the net income for the year was $650,000.