Question

Required Information Problem 10 5A Understand stockholders' equity and the statement of stockholders' equity (LO10-71 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 2021,200 shares of preferred stock and 2,000 shares of common stock have been issued. The following transactions affect stockholders' equity during 2021 March 1 Issue 1,000 shares of common stock for $27 per share. May 15 Purchase 600 shares of treasury stock for $20 per share. July 10 Resell 100 shares of treasury stock purchased on May 15 for $25 per share. October 15 Issue 100 shares of preferred stock for $3e 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, 2020 Preferred Stock. $200: Common Stock. $25: Additional Paid in Capital $61.000, and Retained Earnings. $23,000 Net income for the year ended December 31, 2021, is $9,300 Taking into consideration the beginning balance on January 1 2021 and all the transaction during 2021. respond to the following for Donnie Hager. Problem 10-5A Part 2 2. Prepare the statement of ockholders' equity for the year ended December 31, 2021 (Amounts to be deducted should be indicated by a minus sign) DONGEN Statement of stockholdene Equity For Year Ended December 31. 21 Pedersen sury stock stockholders

Answer 1

Prepare the statement of stockholders' equity as shown below: DH Statement of Stockholders' Equity For the Year Ended December 31, 2021 Preferred Common Additional Retained Stock Stock | Paid-in Earnings Capital $200 $25 $61.000 $23.000 $10 $26.990 Treasury Stock $0 Total Stockholders' Equity $84.225 $27,000 -$12.000 $2.000 Balance, January 1 Issue of common stock Purchase of treasury stock Sale of treasury stock Issued preferred stock Cash dividends Net income Balance, December 31 $500 $2.900 | $100 $2,500 $3.000 -$3.300 $9.300 $110.725 $ $ S - $300 . $35 -$3.300 $9.300 S $29.000 . $91,390 T $10,000 Thus, the ending balance of Stockholders' Equity is $110,725.

Note-1: Determine the par value of common stock issued during the year and ending balance of common stock as shown below: Amount $25 Details Beginning balance of Common Stock Add: Par value of Common Stock issued [1,000 shares $0.01 each] Ending balance of Common Stock $10 I Note-2: Determine the par value of preferred stock issued during the year and ending balance of preferred stock as shown below: Amount $200 Details Beginning balance of Preferred Stock Add: Par value of Preferred Stock issued [100 shares Ⓡ$1 each] Ending balance of Preferred Stock $100 $300

Note-3: Determine the additional paid-in capital value for every common stock and preferred stock issued and ending balance as shown below: Amount $61,000 $26.990 Details Beginning balance of Additional Paid-in Capital Add: Balance of Common Stock issued [1,000 shares ($27 - $0.01) each) Add: Balance of Preferred Stock issued [100 shares x ($30 - $1) each] Add: Reissue of Treasury Stock [100 shares x ($25 - $20) each] Ending balance of Additional Paid-in Capital $2.900 $500 $91,390 Note-4: Determine the ending balance of treasury stock as shown below: Amount $12,000 Details Purchase of Treasury Stock [600 shares x $20 each] Less: Reissue of Treasury Stock [100 shares * $20 each] Ending balance of Treasury Stock $2.000 $10,000

Note-5: Determine the amount of cash dividend as shown below: 2.500 1.000 (600) 100 3.000 Common Stock: Beginning balance of Common Shares [a] Shares issued on March 1 [b] Purchase of Treasury Shares [c] Reissue of Treasury Shares [d] Ending balance of Common Shares ſe = a + b + c + d] Preferred Stock: Beginning balance of Preferred Shares [f] Shares issued on October 15 [g] Ending balance of Preferred Shares ſh = f + g] Total balance of Common Shares and Preferred Shares [i = e + h) Dividend per share [i] Cash Dividends declared [ ij] 2 00 100 300 3,300 $1.00 $3.300