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

Question

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2015, 330 shares of preferred stock and 4,300 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2015: March 1 Issues 1,400 shares of common stock for $45 per share. May 15 Repurchases 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 Declares 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 Pays the cash dividends declared on December 1. Donnie Hilfiger has the following beginning balances in its stockholders’ equity accounts on January 1, 2015: 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, 2015, is $11,400.

a)Record each transactions into journal worksheet.

b)Select

whether each of these transactions would increase (+), decrease (), on total assets, total liabilities, and total stockholders’ equity by completing the following table. (If none of the categories apply for a particular item, leave the cell blank.)

-issue common stock, repurchase treasury stock, reissue treasury stock, issue preferred stock, declare cash dividends, pay cash dividends on total assets,total liabilities, total stockholder's equity.

whether each of these transactions would increase (+), decrease (), on total assets, total liabilities, and total stockholders’ equity by completing the following table. (If none of the categories apply for a particular item, leave the cell blank.)

-issue common stock, repurchase treasury stock, reissue treasury stock, issue preferred stock, declare cash dividends, pay cash dividends on total assets,total liabilities, total stockholder's equity.

Explanation / Answer

Date Account Title & Explanations Debit($) Credit($) calculations Mar-01 cash 63000 (1400*$45) Common stock 14 (1400*$0.01) Paid in capital in excess of par - commonn stock 62986 ($63000-$14) (issue of common stock) May-15 Treasury stock (at cost) 20640 (430*$48) Cash 20640 (purchase of treasury stock) Jul-10 Cash 9890 (230*$43) Treasury stock (at cost) 8740 (230*$38) Paid in capital in excess-treasury stock 1150 ($9890-$8740) (reissue of treasury stock) Oct-15 cash 11040 (230*$48) Preferred stock 230 (230*$1) Paid in capital in excess of par - preferred stock 10810 ($11040-$230) (issue of preferred stock) Dec-01 Retained earnings 4848 (330+4300+1400-430+230+230)*$0.8 Dividend payable - comon stock 448 (330+230)*$0.8 Dividend payable - preferred stock 4400 (4300+1400-430+230)*$0.8 (dividend declared) Dec-31 Dividend payable - comon stock 448 Dividend payable - preferred stock 4400 cash 4848 (dividend paid) Date Transactions Total asset Total Laibilites Equity Mar-01 Issue of common stock Increase Increase May-15 Purchase of treasury stock Decrease Decrease Jul-10 Reissue of treasury stock Increase Increase Oct-15 issue of preferred stock Increase Increase Dec-01 declaration of dividend Increase Decrease Dec-31 Payment of dividend Decrease Decrease

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