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, 400 shares of preferred stock and 5,000 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2015:

  

Declares a cash dividend on both common and preferred stock of $1.50 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, 2015: Preferred Stock, $400; Common Stock, $50; Additional Paid-in Capital, $81,000; and Retained Earnings, $32,500. Net income for the year ended December 31, 2015, is $12,800.

Record each of these transactions.

B)

Select whether each of these transactions would increase (+), decrease (), on total assets, total liabilities, and total stockholders’ equity by completing the following table. (If none of the categories apply for a particular item, leave the cell blank.)

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2015, 400 shares of preferred stock and 5,000 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2015:

Explanation / Answer

Journal Entries:

b)

Date Accounts Titles and explanation Debit $ Credit $ Mar 1 Cash 109200 Common Stock 21 Paid in capital in excess of par - common 109179 May 15 Treasury Stock 22500 Cash 22500 July 10 Cash 15000 Treasury Stock 13500 Paid in capital in excess of par - common 1500 Oct 15 Cash 16500 Preferred Stock 300 Paid in capital in excess of par - preferred stock 16200 Dec 1 Cash dividend 11400 Dividend payable - common stock 10350 Dividend payable - preferred stock 1050 (common - 6900 * 1.5 + preferred 700 * 1.5) Dec 31 Dividend payable - common stock 10350 Dividend payable - preferred stock 1050 Cash 11400

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