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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

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.

 

Sep 21 2020 Read more Less More

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