Question

Required information [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, 300 shares of preferred stock and 3,400 shares of common stock have been issued. The following transactions affect stockholders' equity during 2021: March 1 Issue 1,100 shares of common stock for $36 per share. May 15 Purchase 400 shares of treasury stock for $29 per share. July 10 Resell 200 shares of treasury stock purchased on May 15 for $34 per share. October 15 Issue 200 shares of preferred stock for $39 per share. December 1 Declare a cash dividend on both common and preferred stock of $0.95 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, 2021: Preferred Stock, $300; Common Stock, $34; Additional Paid-in Capital, $70,000; and Retained Earnings, $27,500. Net income for the year ended December 31, 2021, is $10,200. 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

Solution:

Donnie Hilfiger
Balance Sheet - Stockholder's Equity Section
31-Dec-21
Particulars	Amount
Stockholders Equity:
Preferred Stock ($300+$200)	$500
Common Stock ($34+1100*$0.01)	$45
Additional paid in capital ($70000+1100*$35.99+200*$5+200*$38)	$1,18,189
Total Paid in capital	$1,18,734
Retained Earnings ($27500+10200-4800*$0.95)	$33,140
Treasury Stock [(400-200)*$29]	-$5,800
Total Stockholder's Equity	$1,46,074

Donnie Hilfiger
Statement of Stockholder's Equity
For the year ended December 31, 2021
Particulars	Preferred Stock	Common Stock	Additional Paid in Capital	Retained Earnings	Treasury Stock	Total Stockholder's Equity
Balance, January 1	$300	$34	$70,000	$27,500	$0	$97,834
Issue of common stock		$11	$39,589			$39,600
Purchase of Treasury Stock					-$11,600	-$11,600
Resell Treasury stock			$1,000		$5,800	$6,800
Issued Preferred stock	$200		$7,600			$7,800
Declare cash Dividends (4800 Total shares*$0.95)				-$4,560		-$4,560
Net Income				$10,200		$10,200
Balance, December 31	$500	$45	$1,18,189	$33,140	-$5,800	$1,46,074