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 4,000 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 $42 per share.May 15 Purchase 400 shares of treasury stock for $35 per share.July 10 Resell 200 shares of treasury stock purchased on May 15 for $40 per share.October 15 Issue 200 shares of preferred stock for $45 per share.December 1 Declare a cash dividend on both common and preferred stock of $0.50 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, $40; Additional Paid-in Capital, $76,000; and Retained Earnings, $30,500. Net income for the year ended December 31, 2021, is $10,800.Required:1. Record each of these transactions.2. Indicate whether each of these transactions would increase (+), decrease (−), or have no effect (NE) on total assets, total liabilities, and total stockholders’ equity by completing the following chart Transaction TotalAssets TotalLiabilities TotalStockholders’ Equity Issue common stockPurchase treasury stockResell treasury stockIssue preferred stockDeclare cash dividendsPay cash dividends
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
March 1 Issue 1,100 shares of common stock for $42 per share.
May 15 Purchase 400 shares of
July 10 Resell 200 shares of treasury stock purchased on May 15 for $40 per share.
October 15 Issue 200 shares of preferred stock for $45 per share.
December 1 Declare a cash dividend on both common and preferred stock of $0.50 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, $40; Additional Paid-in Capital, $76,000; and
Required:
1. Record each of these transactions.
2. Indicate whether each of these transactions would increase (+), decrease (−), or have no effect (NE) on total assets, total liabilities, and total stockholders’ equity by completing the following chart
| Transaction | Total Assets |
Total Liabilities |
Total Stockholders’ Equity |
| Issue common stock Purchase treasury stock Resell treasury stock Issue preferred stock Declare cash dividends Pay cash dividends |
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