Clifflee,Inc Clifflee,Inc

question 56

Essay

Clifflee,Inc.,reported the following amounts on its June 30,2X09 balance sheet:
$\begin{array}{ll}\text { Preferred stock, } \$ 5 \text { par, } 10 \%, 5,000 \text { shares issued and outstanding } & \$ 25,000 \\\text { Common stock, } \$ 1 \text { par, } 20,000 \text { shares issued and outstanding } & \underline{20,000} \\\text { Additional paid-in capital, common stock } & \underline{65,000} \\\text { Total contributed capital } & \$ 110,000 \\\text { Retained earnings } & \underline{20,000} \\\text { Total stockholders' equity } & \$ 130,000 \\\end{array}$ Clifflee,Inc.declared a 30% common stock dividend on July 12,when the market value of the stock was $25 and a 30% preferred stock dividend on July 13,when the market value of the stock was $50.Both stock dividends will be distributed on August 31,2X09.
Required:
1.Journalize the declaration of the 30% common stock dividend and the 30% preferred stock dividend.
2.Journalize the distribution of the 30% common stock dividend and the 30% preferred stock dividend.
3.Prepare the stockholders' equity section of Clifflee Inc.'s balance sheet after the effects of the two stock dividends.