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, 200 shares of preferred stock and 2,800 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018:

March 1 Issue 1,000 shares of common stock for $30 per share.

May 15 Purchase 600 shares of treasury stock for $23 per share.

July 10 Reissue 100 shares of treasury stock purchased on May 15 for $28 per share.

October 15 Issue 100 shares of preferred stock for $33 per share.

December 1 Declare a cash dividend on both common and preferred stock of $0.85 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.

Donnie Hilfiger has the following beginning balances in its stockholders’ equity accounts on January 1, 2018: Preferred Stock, $200; Common Stock, $28; Additional Paid-in Capital, $64,000; and Retained Earnings, $24,500. Net income for the year ended December 31, 2018, is $9,600.

Taking into consideration the beginning balances on January 1, 2018 and all the transactions during 2018, respond to the following for Donnie Hilfiger:

Problem 10-5A Understand stockholders' equity and the statement of stockholders' equity (LO10-7) The following information applies to the questions displayed below Donnie Hiiger has two classes of stock authorized S1 par prefered ond 5o01 er vave common Asof the begning of zoe 200 shares of prelered ock and 2800 share of cemmion seck have been issued. The following transactions afflect stockholders equty during 2018 March 1 Issue 1000 shares of common stock for $30 per share May 15 Purchase 600 shares of treasury stock for $23 per share uly 10 Reissue 100 shares of treasury stock purchased on May 15 for $28 per share October 15 Issue 100 shares of prefenied stock for $33 per shae December 1 Declare cash dividend on bom common and preferred December 31 Pay the cesh dividensds deciared on December 85 pe phais to at eocholrs Donnie Hilliger has the fotiowing beginning blences in s ste Earnings, $24,500 Net income for the yeu ended Dece 31 208 Taking nso considecation the beginning balances on Jernuery t .2018 the ascons 201sond

Explanation / Answer

ans 1 Stockholder Equity Preferred stock $300 Common stock $38 additional paid in capital $96,700 Total paid in capital $97,038 Reatined Eranings $31,040 Less: treasury stock ($11,500) Total stockholder equity $116,578 ans 2 Statement of stockholder equity Preferred Stock Common stock Additional paid in capital Retained eranings Treasury stock Total stockholder equity Bal Jan 1 $200 28 64000 24500 $88,728 Issue of common stock 10 29000 $29,010 (1000*.01) $0 Purchase of treasury stcok -13800 ($13,800) Sales of treasury stcok 500 2300 $2,800 (100*5) $0 Issue of Preferred stock 100 3200 $3,300 Dividends -3060 ($3,060) Net income 9600 $9,600 Bal Dec 31 $300 $38 $96,700 $31,040 ($11,500) $116,578 Dividends Preferred stock (200+100)*.85 255 Common stock (2800+1000-600+100)*.85 2805 3060

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.