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Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common....

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2018, 460 shares of preferred stock and 5,600 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018:

March 1 Issues 2,700 shares of common stock for $58 per share.

May 15 Purchase 560 shares of treasury stock for $51 per share.

July 10 Reissues 360 shares of treasury stock purchased on May 15 for $56 per share.

October 15 Issues 360 shares of preferred stock for $61 per share.

December 1 Declare a cash dividend on both common and preferred stock of $2.10 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, $460; Common Stock, $56; Additional Paid-in Capital, $84,000; and Retained Earnings, $33,700. Net income for the year ended December 31, 2018, is $14,000.

Record each of these transactions:

march 1 2018

may 15 2018

july 10 2018

oct 15 2018

dec 01 2018

dec 15 2018

dec 31 2018

Solutions

Expert Solution

Date General Journal Debit Credit
March 1, 2018 Cash (2700 x $58) 156600
Common stock (2700 x $0.01) 27
Additional paid-in capital (common) 156573
(To record issue of common stock)
May 15, 2018 Treasury stock (560 x $51) 28560
Cash 28560
(To record purchase of treasury stock)
July 10, 2018 Cash (360 x $56) 20160
Treasury stock (360 x $51) 18360
Additional paid-in capital (treasury stock) 1800
(To record re-issue of treasury stock)
Oct 15, 2018 Cash (360 x $61) 21960
Preferred stock (360 x $1) 360
Additional paid-in capital (preferred) 21600
(To record issue of preferred stock)
Dec 01, 2018 Dividend 18732
Dividend payable 18732
(To record declaration of cash dividend on common and preferred stock)
Dec 15, 2018 No journal entry required
Dec 31, 2018 Dividend payable 18732
Cash 18732
(To record payment of dividends)

Working:

Dividends:
Number of preferred stock (460 + 360) 820
Number of common stock (5600 + 2700 - 560 + 360) 8100
Total number of shares on which dividend declared 8920
Dividend per share $ 2.10
Total dividend $ $       18,732

ekkarill92 answered 1 year ago
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