In: Accounting
[The following information applies to the questions
displayed below.]
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.
Taking into consideration the beginning balances on January 1, 2018
and all the transactions during 2018, respond to the following for
Donnie Hilfiger:
1. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2018.
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2. Prepare the statement of stockholders’ equity for the year ended December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)
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