Question

Required information Problem 10-5A Understand stockholders' equity and the statement of stockholders' equity (LO10-7) [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 2021, 100 shares of preferred stock and 2,300 shares of common stock have been issued. The following transactions affect stockholders' equity during 2021: 1 Issue 1,200 shares of common stock for $25 per share. 15 Purchase 500 shares of treasury stock for $18 per share. 10 Resell 300 shares of treasury stock purchased on May 15 for $23 per share 15 Issue 300 shares of preferred stock for $28 per share 1 Declare a cash dividend on both common and preferred stock of $0.65 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.) March May July October December 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, 2021: Preferred Stock, $100; Common Stock, $23; Additional Paid-in Capital, $59,000; and Retained Earnings, $22,000. Net income for the year ended December 31, 2021, is $9,100. Taking into consideration the beginning balances on January 1, 2021 and all the transactions during 2021, respond to the following for Donnie Hilfiger:

Answer 1

ans 1
Stockholder equity section
Preferred Stock	$400
Common stock	$35
Add paid in cap	$101,588
Total paid in capital	$102,023
Retained Eraning	$28,695
Treasury stock	($3,600)
Total stockholder equity	$127,118
ans 2
	Preferred Stock	Common stock	Add paid in cap	Retained Eraning	Treasury stock	Total stockholder equity
Balance, Jan 1	$100	$23	59000	22000		$81,123
Issue common stock		12	29988			$30,000
			(1200*(25-.01))			$0
Purchase Treasury stock					-9000	($9,000)
Resell Treasuary stock			1500		5400	$6,900
			(300*5)			$0
Issue preferred stock	300		11100			$11,400
	(300*1)		(300*27)			$0
Declare cash dividend				-2405		($2,405)
				(100+300+2300+1200-500+300)*.65		$0
Net Income				9100		$9,100
Bal dec 31	$400	$35	$101,588	$28,695	($3,600)	$127,118
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