Chapter 11, Problem 11SP

1.

To determine

Explain the difference between the two types of stock and give suggestion to Person K that which type of stock is most appropriate for her to issue. 

2.

To determine

Prepare the journal entry to record the issuance of the preferred stock for cash.

3.

To determine

Discuss the difference between a cash dividend and a stock dividend, and show the effect of issuing a 10% stock dividend for common stock.

4.

To determine

Provide journal entry to record the payment of the cash dividends.

5.

To determine

Prepare a statement of retained earnings for the month of August 2013 and the stockholders’ equity section of the balance sheet as of August 31, 2013.