Intermediate accounting

Sands Corporation has the following capital structure at the beginning of the year:

6% preferred stock, $50 par value, 20,000 shares
authorized, 6,000 shares issued 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 pf par $110,000

total paid in capital $810,000
Retained earnings $340,000

total stockholders equity $1,150,000

Instructions:
a.) Record the following transactions which occurred consecutively (show all calculations).

1. A total cash dividend of $70,000 was declared and payable to stockholders of record. Record dividends payable on common and preferred stock in separate accounts.

2. A 10% common stock dividend was declared. The average market value of the common stock is $15 a share.

3. Assume that net income for the year was $240,000 (record the closing entry).

b.) What is the balance of the stockholders equity section at the end of the year as a result of these transactions.

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