Question

Required information Problem 10-5A Understand stockholders' equity and the statement of stockholders' equity (LO10-7) [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 2,800 shares of common stock have been issued. The following transactions affect stockholders' equity during 2021: 1 Issue 1,000 shares of common stock for $30 per share. 15 Purchase 600 shares of treasury stock for $23 per share. 10 Resell 100 shares of treasury stock purchased on May 15 for $28 per share. 15 Issue 100 shares of preferred stock for $33 per share. 1 Declare a cash dividend on both common and preferred stock of $0.85 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.) March Мay July October December 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, $200; Common Stock, $28; Additional Paid-in Capital, $64,000; and Retained Earnings, $24,500. Net income for the year ended December 31, 2021, is $9,600 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

Solution 1:

G H 23 24 25 26 Amount 27 28 Donnie Hilfiger Balance Sheet - Stockholder's Equity Section 31-Dec-21 Particulars Stockholders Equity: Preferred Stock ($200+$100) Common Stock ($28+1000*$0.01) Additional paid in capital (64000+1000*29.99 +100*$32+ 100*$5) 29 $300 $38 30 37 $97,690 32 33 34 Total Paid in capital Retained Earnings ($24500+9600-3600*$0.85) Treasury Stock [(600-100)*$23] $98,028 $31,040 -$11,500 35 36 37 Total Stockholder's Equity $117,568 38 39 7. Sheet524 (3) Sheet891 ) Sheet892 Sheet369 (9) Sheet202 (9) Sheet406 (7) Sheet897 ).

Solution 2:

H Donnie Hilfiger Statement of Stockholder's Equity For the year ended December 31, 2021 Particulars Preferred Stock Common Stock Additional Paid in Capital Retained Earnings Treasury Stock $200 $24,500 $0 $28 $10 $64,000 $29,990 12 Total Stockholder's Equity $88,728 $30,000 -$13,800 $2,800 $3,300 -$3,060 $9,600 13 Balance, January 1 Issue of common stock Purchase of Treasury Stock Resell Treasury stock Issued Preferred stock Declare cash Dividends (3600 Total shares*$0.85) Net Income $13,800 $2,300 14 $500 $3,200 c atach $100 15 16 $3,060 $9,600 17 18 19 Balance, December 31 $300 $38 $97,690 $31,040 $11,500 $117,568 20 21 22 23 7 Sheet524 (3) Sheet891 Sheet892 Sheet369 (9) Sheet202 (9) Sheet406 (7) Sheet897