Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $.01 p

Question

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $.01 par value common. As of the beginning of 2012, 230 shares of preferred stock and 2,480 shares of common stock have been issued. The following transactions affect stockholders' equity during 2012:

Declares a cash dividend on both common and preferred stock of $.60 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.)

Donnie Hilfiger has the following beginning balances in its stockholders' equity accounts on January 1, 2012: Preferred Stock, $230; common Stock, $24.80; Additional Paid-in Capital, $75,000; and Retained Earnings, $25,500. Net income for the year ended December 31, 2012, is $9,200.

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $.01 par value common. As of the beginning of 2012, 230 shares of preferred stock and 2,480 shares of common stock have been issued. The following transactions affect stockholders' equity during 2012:

Explanation / Answer

Hi,

Please find the entries as follows:

Common Stock Outstanding = 2480 + 1200 - 530 + 90 = 3240 Shares

Preferred Stock Outstanding = 230 + 150 = 380 Shares

December 1:

Retained Earnings Dr. 2172

Dividend Payable Cr. 2172

December 31

Dividend Payable Dr. 2172

To Cash Cr. 2172

Thanks.

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