Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01

Question

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2015, 200 shares of preferred stock and 2,500 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2015: March 1 Issues 1,000 shares of common stock for $27 per share. May 15 Repurchases 600 shares of treasury stock for $20 per share. July 10 Reissues 100 shares of treasury stock purchased on May 15 for $25 per share. October 15 Issues 100 shares of preferred stock for $30 per share. December 1 Declares a cash dividend on both common and preferred stock of $1.00 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.) December 31 Pays the cash dividends declared on December 1. Donnie Hilfiger has the following beginning balances in its stockholders’ equity accounts on January 1, 2015: Preferred Stock, $200; Common Stock, $25; Additional Paid-in Capital, $61,000; and Retained Earnings, $23,000. Net income for the year ended December 31, 2015, is $9,300. Taking into consideration all the transactions during 2015, respond to the following for Donnie Hilfiger: Prepare the stockholders’ equity section of the balance sheet as of December 31, 2015. Prepare the statement of stockholders’ equity for the year ended December 31, 2015.

Explanation / Answer

Stockholders equity

paid in capital

Common stock $.01 par value 3,500 shares $35
preferred stock $1 par value 300 shares $300

Additional Paid in capital(61,000+26,990+2,900) $90,890
Additional paid in capital - treasury stock($5 *100) $500

Total paid in capital $91,725

retained earnings ($23,000+$9,300-$3,300) $29,000

Less treasury stock 500* $20 ( $10,000 )

Total Stockholders capital $110,725

Statement of stock holders equity

Particulars Common stock preferred stock Additional Retained Treasury stock Additional
   $.01 par $1 par paid in capital earnings treasury

Beginning $25 $200 $61,000 $23,000

Issue common $10 $26,990

repurchase (12,000)

Re issue 2,000 $500

Issue preferred $100 $2,900

cash dividend (3,300)

Net income $9,300

ending $35 $300 $90,890 $29,000 $10,000 $500 total$110,725

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