Question

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2018, 330 shares of preferred stock and 4,300 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018:

1. Record each of these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

March 1 Issues 1,400 shares of common stock for $45 per share.

May 15 Purchase 430 shares of treasury stock for $38 per share.

July 10 Reissues 230 shares of treasury stock purchased on May 15 for $43 per share.

October 15 Issues 230 shares of preferred stock for $48 per share.

December 1 Declare a cash dividend on both common and preferred stock of $0.80 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, $330; Common Stock, $43; Additional Paid-in Capital, $77,500; and Retained Earnings, $31,100. Net income for the year ended December 31, 2018, is $11,400.

Answer 1

Journal entry

Date	account and explanation	debit	credit
Mar 1	Cash (1400*45)	63000
	Common Stock (1400*.01)		14
	Paid in capital in excess of par value-Common Stock		62986
	(To record issue common stock)
Mar 15	Treasury Stock (430*38)	16340
	Cash		16340
	(To record treasury stock)
July 10	Cash (230*43)	9890
	Treasury Stock (230*38)		8740
	Paid in capital from sale of treasury stock		1150
	(To record sale of treasury stock)
Oct 15	Cash (230*48)	11040
	Preferred stock		230
	paid in capital in excess of par value-preferred stock		10810
	(To record preferred stock)
Dec 1	Cash dividend (6060*.80)	4848
	Dividend payable		4848
	(To record dividend declared)
Dec 31	Dividend payable	4848
	cash		4848
	(To record dividend paid)