Question

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2021, 320 shares of preferred stock and 4,200 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021:

March		1		Issue 1,300 shares of common stock for $44 per share.
May		15		Purchase 420 shares of treasury stock for $37 per share.
July		10		Resell 220 shares of treasury stock purchased on May 15 for $42 per share.
October		15		Issue 220 shares of preferred stock for $47 per share.
December		1		Declare a cash dividend on both common and preferred stock of $0.70 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, $320; Common Stock, $42; Additional Paid-in Capital, $77,000; and Retained Earnings, $30,900. Net income for the year ended December 31, 2021, is $11,200.

Required:

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.)

2. Select whether each of the following transactions increases ( + ) or decreases ( − ) total assets, total liabilities, and total stockholders' equity. (If none of the categories apply for a particular item, leave the cell blank.)

Answer 1

1-
Date	explanation	debit	credit
1-Mar	cash	57200
	common stock		13
	additional paid in capital-common stock		57187
15-May	treasury stock	15540
	cash		15540
10-Jul	cash	9240
	treasury stock		8140
	additional paid in capital		1100
15-Oct	cash	10340
	preferred stock		220
	additional paid in capital		10120
1-Dec	retained earning	4074
	preferred dividend payable		378
	common stock dividend payable		3696
31-Dec	preferred dividend payable	378
	common stock dividend payable	3696
	cash		4074
2-	Transaction	total assets	=	total of liabilities	+	total stockholders' equity
	1-	+	=			+
	2-	-	=			-
	3-	+				+
	4-	+				+
	5-			+		-
	6-	-		-