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

		Debit	Credit
March 01	Cash	39600		=1100*36
	Common Stock		11	=1100*0.01
	Additional Paid in Capital		39589
May 15	Treasury Stock	11600		=400*29
	Cash		11600
July 10	Cash	6800		=200*34
	Treasury Stock		5800	=200*29
	Additional Paid in Capital		1000
October 15	Cash	7800		=200*39
	Preferred Stock		200	=200*1
	Additional Paid in Capital		7600
December 01	Dividends	4560		=(300+3400+1100-400+200+200)*0.95
	Dividends payable		4560
December 15	NO Journal entry required
December 31	Dividends payable	4560
	Cash		4560