Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2021, 390 shares of preferred stock and 4,900 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021: March 1 Issue 2,000 shares of common stock for $51 per share. May 15 Purchase 490 shares of treasury stock for $44 per share. July 10 Resell 290 shares of treasury stock purchased on May 15 for $49 per share. October 15 Issue 290 shares of preferred stock for $54 per share. December 1 Declare a cash dividend on both common and preferred stock of $1.40 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, $390; Common Stock, $49; Additional Paid-in Capital, $80,500; and Retained Earnings, $32,300. Net income for the year ended December 31, 2021, is $12,600. Question : a. Record the declaration of a cash dividend on both common and preferred stock of $1.40 per share to all stockholders. (Hint: Dividends are not paid on treasury stock.) b. Record the cash dividends declared on December 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2021, 390 shares of preferred stock and 4,900 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021:

March	1	Issue 2,000 shares of common stock for $51 per share.
May	15	Purchase 490 shares of treasury stock for $44 per share.
July	10	Resell 290 shares of treasury stock purchased on May 15 for $49 per share.
October	15	Issue 290 shares of preferred stock for $54 per share.
December	1	Declare a cash dividend on both common and preferred stock of $1.40 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, $390; Common Stock, $49; Additional Paid-in Capital, $80,500; and Retained Earnings, $32,300. Net income for the year ended December 31, 2021, is $12,600.

Question :

a. Record the declaration of a cash dividend on both common and preferred stock of $1.40 per share to all stockholders. (Hint: Dividends are not paid on treasury stock.)

b. Record the cash dividends declared on December 1.

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