The Stockholders’ equity section of the balance of Lim Mills, Inc., as of December 31, 2010, was as follows:

Contributed capital

Common stock, $3 par value, 1,000,000 shares

authorized, 80,000 shares issued

and outstanding ........... $ 240,000

Additional paid-in-capital ........ 75,000

Total contributed capital ........ $ 315,000

Retained earnings ............ 240,000

Total stockholders’ equity ........ $ 555,000

A review of the stockholders’ equity records of Lim Mills. Inc., disclosed the following transactions during 2011:

Mar25The board of directors declared a 5 percent stock dividend to stockholders of record on April 20 to be distributed on May 1. The market value of the common stock was $21 per share.

Apr20Date of record for stock dividend.

May 1Issued stock dividend.

Sep 10Declared a 3-for-1 stock split.

Dec 15Declared a 10 percent stock dividend to stockholders of record on January 15 to be distributed on February 15. The market price on this date is $9 per share.

Required

1. Records the stockholders’ equity components of the transactions for Lim Mills, Inc., in T accounts.

2. Prepare the stockholders’ equity section of the company’s balances sheet as of December 31, 2011. Assume net income for 2011 is $494,000.

3. If you owned 2,000 shares of Lim Mills stock on March 1, 2011, how many shares would you own on February 15, 2012? Would your proportionate share of the ownership of the company the different on the latter date from what it was on the former date? Explain your answer.