SERIAL PROBLEM: KATE S CARDS (Note: This is SP a continuation of the Serial Prob
ID: 2528571 • Letter: S
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SERIAL PROBLEM: KATE S CARDS (Note: This is SP a continuation of the Serial Problem: Kate's Cards from Chapters I through 10 Kate's bus 11. pte 015, that Kate started the business. She is especially pleased that she was able end herself against what turned out to be a mistaken attempt to sue her for copyright i he was able to clearly demonstrate that her card designs were unique and significan to successfully de. of nfringe fend herself against what turncnous he isspcially plensed that she was able to in Sepenber t ment antly differert represents a investor rather from the designs sold by Mega Card:s Kate has decided to take on an investor. Taylor Kasey believes that Kate's Cards re good investment and wishes to invest money to help Kate expand the business. Kate somewhat unsure how to structure Taylor's investment. Taylor wishes to be an equity than simply providing a loan to Kate. Kate wants to know whether she should issue Tayl stock or preferred stock for her investment. common I. Discuss the difference between the two classes of stock and suggest which type is propriate for Kate to issue Kate has decided that she does not want to give up voting control of Kate's Cards. Since Tav prefers to be a passive investor, but does wish to have a steady income from dividends. decision is made to issue 50 shares of $100 par value, 6 percent cumulative preferred st Provide the journal entry to record the issuance of the preferred stock for cash 2. or , the Kate also wishes to pay dividends on both her common shares and the preferred stock a little confused between cash and stock dividends 3. 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? 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 that 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 4.Explanation / Answer
Statement of Retained Earnings Beginning Balance, 31 July $15,000 Add: net Income 1500 Ending Balance August 31 $16,500 Stockholder Equity section Preferred stock Common stock (5000 sharres authorized, 500 shares issued and outstanding $500 Paid in capital in excess of par-Common stock $9,500 Total paid in capital $10,000 Retained earnings $16,500 Total stockholder equity $26,500
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