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, 150 shares of preferred stock and 3,780 shares of common stock have been issued. The following transactions affect stockholders' equity during 2012: Mar. 1 Issues 1,100 shares of common stock for $40 per share. May 15 Repurchases 670 shares of treasury stock for $20 per share. Jul. 10 Reissues 110 shares of treasury stock purchased on May 15 for $24 per share. Oct. 15 Issues 80 shares of preferred stock for $44 per share. Dec. 1 Declares a cash dividend on both common and preferred stock of $.80 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.) Dec. 31 Pays the cash dividends declared on December 1. Donnie Hilfiger has the following beginning balances in its stockholders' equity accounts on January 1, 2012: Preferred Stock, $150; common Stock, $37.80; Additional Paid-in Capital, $76,000; and Retained Earnings, $25,500. Net income for the year ended December 31, 2012, is $9,100.

Explanation / Answer

Mar. 1 Issues 1,400 shares of common stock for $35 per share.
Dr Cash 49,000
Cr Common Stock 14* (are you sure it's $0.01 per share?)
Cr Paid-in Capital in Excess of Par Value--Common 48,986

May 15 Repurchases 550 shares of treasury stock for $29 per share.
Dr Treasury Stock 15,950
Cr Cash 15,950

Jul. 10 Reissues 100 shares of treasury stock purchased on May 15 for $32 per share.
Dr Cash 3,200
Cr Common Treasury Stock 2,900
Cr Paid-in Capital on Sale of Treasury Stock 300

Oct. 15 Issues 90 shares of preferred stock for $37 per share.
Dr Cash 3,330
Cr Preferred Stock 90
Cr Paid-in Capital in Excess of Par Value--Preferred 3,240

Dec. 1
Declares a cash dividend on both common and preferred stock of $.50 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.)
210 + 90 = 300 shares of preferred stock outstanding
2,230 + 1,400 - 550 + 100 = 3,180 shares of common stock outstanding
(3,180 + 300) x 0.50 = $1,740 total dividends
Dr Retained Earnings 1,740
Cr Dividends Payable 1,740

Dec. 31 Pays the cash dividends declared on December 1.
Dr Dividends Payable 1,740
Cr Cash 1,740

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