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 2018, 340 shares of preferred stock and 4,400 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018: March 1 Issues 1,500 shares of common stock for $46 per share. May 15 Purchase 440 shares of treasury stock for $39 per share. July 10 Reissues 240 shares of treasury stock purchased on May 15 for $44 per share. October 15 Issues 240 shares of preferred stock for $49 per share. December 1 Declare a cash dividend on both common and preferred stock of $0.90 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.) December 31 Pay the cash dividends declared on December 1.

Explanation / Answer

Answer Journal Enteries Sl. No. Date Account Debit Credit 1 03/01/2018 Cash 69000 Common Stock 15 Paid In capital in excess of par value -Common 68985 2 05/15/2018 Treasury Stock 17160 Cash 17160 3 07/10/2018 Cash 10560 Treasury Stock 9360 Paid In capital on sale of treasury stock 1200 4 10/15/2018 Cash 11760 Preferred Stock 240 Paid In capital in excess of par Value - Preferred 11520 5 12/1/2018 Retained Earning 5652 Dividened Payable 5652 ( Preferred Stock = 340+240= 580 shares Common Stock = 4400+1500-440+240 =5700 shares Dividend = (580+5700)*0.90 = 5652) 6 12/31/2018 Dividened Payable 5652 Cash 5652

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