Question

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2018, 350 shares of preferred stock and 4,500 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018:

March 1 Issues 1,600 shares of common stock for $47 per share.

May 15 Purchase 450 shares of treasury stock for $40 per share.

July 10 Reissues 250 shares of treasury stock purchased on May 15 for $45 per share.

October 15 Issues 250 shares of preferred stock for $50 per share.

December 1 Declare a cash dividend on both common and preferred stock of $1.00 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, $350; Common Stock, $45; Additional Paid-in Capital, $78,500; and Retained Earnings, $31,500. Net income for the year ended December 31, 2018, is $11,800.

Required:

1. Record each of these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Note: Enter debits before credits.

	Date General Journal Debit Credit December 01, 2018 Dividends Dividends payable

Answer 1

solution: Debit Credit Date General Journal March 01,2018 cash-1600*47 75200 common stock-1600 *0.01 Additional paid in capital 16 75184 18000 May 15,2018 Treasury stock cash (450*40) 18000 July 10,2018 cash-250*45 11250 Additional paid in capital Treasury stock-250*40 1250 10000 oct 15,2018 cash 250*50 12500 Preferred stock-250*1 250 12250 Additional paid in capital Dividends Dividend Payable (350+250)1+4500+1600-450+250)*1 Dec 1,2018 6500 6500 Dividend Payable Dec 31,2018 6500 cash 6500