Question

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

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2021, 390 shares of preferred stock and 4,900 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021:

March 1 Issue 2,000 shares of common stock for $51 per share.
May 15 Purchase 490 shares of treasury stock for $44 per share.
July 10 Resell 290 shares of treasury stock purchased on May 15 for $49 per share.
October 15 Issue 290 shares of preferred stock for $54 per share.
December 1 Declare a cash dividend on both common and preferred stock of $1.40 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, 2021: Preferred Stock, $390; Common Stock, $49; Additional Paid-in Capital, $80,500; and Retained Earnings, $32,300. Net income for the year ended December 31, 2021, is $12,600.

1. Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) And record the cash dividends declared on December 1st.

Date General Ledger Debit Credit

Homework Answers

Answer #1

Journal entry

Date account and explanation Debit Credit
Mar 1 Cash (2000*51) 102000
Common stock (2000*.01) 20
Paid in capital in excess of par value-Common Stock 101980
May 15 Treasury stock (490*44) 21560
Cash 21560
July 10 Cash (290*49) 24010
Treasury stock (290*44) 21560
Paid in capital from sale of treasury stock 2450
Oct 15 Cash (290*54) 15660
Preferred stock 290
Paid in capital in excess of par value-Preferred stock 15370
Dec 1 Cash dividend (7380*1.4) 10332
Dividend payable 10332
Dec 31 Dividend payable 10332
Cash 10332
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