Question

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2018, 300 shares of preferred stock and 4,000 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018:

March 1 Issue 1,100 shares of common stock for $42 per share.
May 15 Purchase 400 shares of treasury stock for $35 per share.
July 10 Reissue 200 shares of treasury stock purchased on May 15 for $40 per share.
October 15 Issue 200 shares of preferred stock for $45 per share.
December 1 Declare a cash dividend on both common and preferred stock of $0.50 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, $300; Common Stock, $40; Additional Paid-in Capital, $76,000; and Retained Earnings, $30,500. Net income for the year ended December 31, 2018, is $10,800.

Required:

1. Record each of these transactions.

(I need the most help on the Dividends and Dividends payable amounts from december 1st and december 30th)

Answer 1

Date	Particulars	Debit	Credit
1-Mar	Bank	46,200
	common stock		11
	Additional Paid-in Capital		46,189
15-May	treasury Stock	14,000
	Bank		14,000
10-Jul	Bank	8,000
	treasury Stock		7,000
	Additional Paid-in Capital		1,000
15-Oct	bank	9,000
	Preference stock		200
	Additional Paid-in Capital		8,800
1-Dec	Retained earnings	2,350
	Proposed dividend		2,350
31-Dec	Proposed dividend	2,350
	bank		2,350