Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises' stockholders' equity accounts, with balances on January 1, 20Y6, are as follows: Common Stock, $20 stated value (500,000 shares authorized, 375,000 shares issued) $ 7,500,000 Paid-In Capital in Excess of Stated Value—Common Stock 825,000 Retained Earnings 33,600,000 Treasury Stock (25,000 shares, at cost) 450,000 The following selected transactions occurred during the year: Jan. 22. Paid cash dividends of $0.08 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $28,000. Apr. 10. Issued 75,000 shares of common stock for $24 per share. June 6. Sold all of the treasury stock for $26 per share. July 5. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $25 per share. Aug. 15. Issued shares of stock for the stock dividend declared on July 5. Nov. 23. Purchased 30,000 shares of treasury stock for $19 per share. Dec. 28. Declared a $0.10-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $1,125,000. 31. Closed the two dividends accounts to Retained Earnings. Instructions Enter the January 1 balances in T accounts for the stockholders' equity accounts listed. Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends. Journalize the entries to record the transactions, and post to the eight selected accounts. Prepare a retained earnings statement for the year ended December 31, 20Y6. Prepare the Stockholders' Equity section of the December 31, 20Y6, balance sheet.

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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Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises' stockholders' equity accounts, with balances on January 1, 20Y6, are as follows:

Common Stock, $20 stated value (500,000 shares authorized, 375,000 shares issued)	$ 7,500,000
Paid-In Capital in Excess of Stated Value—Common Stock	825,000
Retained Earnings	33,600,000
Treasury Stock (25,000 shares, at cost)	450,000

The following selected transactions occurred during the year:

Jan. 22.		Paid cash dividends of $0.08 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $28,000.
Apr. 10.		Issued 75,000 shares of common stock for $24 per share.
June 6.		Sold all of the treasury stock for $26 per share.
July 5.		Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $25 per share.
Aug. 15.		Issued shares of stock for the stock dividend declared on July 5.
Nov. 23.		Purchased 30,000 shares of treasury stock for $19 per share.
Dec. 28.		Declared a $0.10-per-share dividend on common stock.
31.		Closed the credit balance of the income summary account, $1,125,000.
31.		Closed the two dividends accounts to Retained Earnings.

Instructions

Enter the January 1 balances in T accounts for the stockholders' equity accounts listed. Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.
Journalize the entries to record the transactions, and post to the eight selected accounts.
Prepare a retained earnings statement for the year ended December 31, 20Y6.
Prepare the Stockholders' Equity section of the December 31, 20Y6, balance sheet.

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