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

Answer 1

Date	Account	Debit	Credit
Mar 1	Cash (1000*30)	30000
	Common Stock (1000*0.01)		10
	Paid-in Capital in Excess of Par Value--Common (1000*(30-0.01)		29990
	(Issue 1,000 shares of common stock for $30 per share)
Mar 15	Treasury Stock 600*23	13800
	Cash		13800
	(purcahse of treasury stock)
Jul 10	Cash 100*28	2800
	Treasury Stock 100*23		2300
	Paid-in Capital on Sale of Treasury Stock		500
	(reissue of treasury stock)
Oct15	Cash 100*33	3300
	Preferred Stock 100*1		100
	Paid-in Capital in Excess of Par Value--Preferred		3200
	(issue preferred stock at 33)
Dec 1	Retained Earning 0.85*(200+100)	255
	Dividend Payable		255
Dec 13	Dividend Payable	255
	Cash		255
Dec 1	Retained Earning 0.85*(2800-600+100)	1955
	Dividend Payable		1955
Dec 13	Dividend Payable	1955
	Cash		1955