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 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 , $30,500Net income for the year ended December 31, 2021 , is $10,800

Taking into consideration the beginning balances on January 1, 2021 and all the transactions during 2021 , respond to the following for Donnie Hilfiger

- Prepare the statement of stockholders ' equity for the year ended December 31, 2021. (Amounts to be deducted should be dicated by a minus sign.)

Answer 1

Sure, let's prepare the statement of stockholders' equity for Donnie Hilfiger for the year ended December 31, 2021.

1. Preferred Stock:
- Beginning balance: $300
- Issued 200 shares on October 15: $200
- Ending balance: $500

2. Common Stock:
- Beginning balance: $40
- Issued 1,100 shares on March 1: $11
- Ending balance: $51

3. Additional Paid-in Capital:
- Beginning balance: $76,000
- Issued 1,100 shares of common stock: $45,100 (1,100 shares * $42 - $11)
- Issued 200 shares of preferred stock: $8,000 (200 shares * $45 - $200)
- Treasury stock sold: $1,000 (200 shares * $40 - $35)
- Ending balance: $130,100

4. Treasury Stock:
- Beginning balance: $0
- Purchased 400 shares: -$14,000 (400 shares * $35)
- Sold 200 shares: $7,000 (200 shares * $35)
- Ending balance: -$7,000

5. Retained Earnings:
- Beginning balance: $30,500
- Net income: $10,800
- Dividends: -$2,250 (300 preferred shares * $0.50 + 4,500 common shares * $0.50)
- Ending balance: $39,050

Please note that these calculations are simplified and actual statement might require more detailed calculations and adjustments.