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. Jun. 6 Sold all of the treasury stock for $26 per share. Jul. 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. Required: 1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. 2. Journalize the entries to record the transactions, and post to the eight selected accounts. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles. 3. Prepare a retained earnings statement for the year ended December 31, 20Y6. For those boxes in which you must enter subtracted or negative numbers use a minus sign. 4. Prepare the Stockholders’ Equity section of the December 31, 20Y6, balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign. * Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. CHART OF ACCOUNTSMorrow Enterprises Inc.General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 311 Common Stock 313 Paid-In Capital in Excess of Stated Value-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 515 Credit Card Expense 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Selling Expenses 534 Rent Expense 535 Insurance Expense 536 Office Supplies Expense 537 Organizational Expenses 562 Depreciation Expense-Equipment 590 Miscellaneous Expense 710 Interest Expense Amount DescriptionsCash balance, July 31, 20Y6Cash dividendsChange in retained earningsCommon stock, $20 stated value (500,000 shares authorized, 375,000 shares issued)Common stock, $20 stated value (500,000 shares authorized, 438,000 shares issued)Common stock, $20 stated value (500,000 shares authorized, 468,000 shares issued)Excess of issue price over stated valueFor the Year Ended December 31, 20Y6From sale of treasury stockNet incomeNet lossRetained earningsRetained earnings, December 31, 20Y6Retained earnings, January 1, 20Y6Stock dividendsTotalTotal paid-in capitalTotal stockholders’ equityTreasury stock (30,000 shares at cost) 1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Post the journal entries from part 2 to the eight selected accounts.

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. Jun. 6 Sold all of the treasury stock for $26 per share. Jul. 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. Required: 1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. 2. Journalize the entries to record the transactions, and post to the eight selected accounts. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles. 3. Prepare a retained earnings statement for the year ended December 31, 20Y6. For those boxes in which you must enter subtracted or negative numbers use a minus sign. 4. Prepare the Stockholders’ Equity section of the December 31, 20Y6, balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign. * Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. CHART OF ACCOUNTSMorrow Enterprises Inc.General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 311 Common Stock 313 Paid-In Capital in Excess of Stated Value-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 515 Credit Card Expense 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Selling Expenses 534 Rent Expense 535 Insurance Expense 536 Office Supplies Expense 537 Organizational Expenses 562 Depreciation Expense-Equipment 590 Miscellaneous Expense 710 Interest Expense Amount DescriptionsCash balance, July 31, 20Y6Cash dividendsChange in retained earningsCommon stock, $20 stated value (500,000 shares authorized, 375,000 shares issued)Common stock, $20 stated value (500,000 shares authorized, 438,000 shares issued)Common stock, $20 stated value (500,000 shares authorized, 468,000 shares issued)Excess of issue price over stated valueFor the Year Ended December 31, 20Y6From sale of treasury stockNet incomeNet lossRetained earningsRetained earnings, December 31, 20Y6Retained earnings, January 1, 20Y6Stock dividendsTotalTotal paid-in capitalTotal stockholders’ equityTreasury stock (30,000 shares at cost) 1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Post the journal entries from part 2 to the eight selected accounts.

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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Question

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.
Jun.	6	Sold all of the treasury stock for $26 per share.
Jul.	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.

Required:

Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed.

Journalize the entries to record the transactions, and post to the eight selected accounts. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles.

Prepare a retained earnings statement for the year ended December 31, 20Y6. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Prepare the Stockholders’ Equity section of the December 31, 20Y6, balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

* Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

CHART OF ACCOUNTSMorrow Enterprises Inc.General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Inventory
145	Office Supplies
151	Prepaid Insurance
181	Land
193	Equipment
194	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
226	Interest Payable
231	Cash Dividends Payable
236	Stock Dividends Distributable
241	Salaries Payable
261	Mortgage Note Payable

	EQUITY
311	Common Stock
313	Paid-In Capital in Excess of Stated Value-Common Stock
315	Treasury Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
351	Cash Dividends
352	Stock Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
515	Credit Card Expense
520	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Selling Expenses
534	Rent Expense
535	Insurance Expense
536	Office Supplies Expense
537	Organizational Expenses
562	Depreciation Expense-Equipment
590	Miscellaneous Expense
710	Interest Expense

Amount DescriptionsCash balance, July 31, 20Y6Cash dividendsChange in retained earningsCommon stock, $20 stated value (500,000 shares authorized, 375,000 shares issued)Common stock, $20 stated value (500,000 shares authorized, 438,000 shares issued)Common stock, $20 stated value (500,000 shares authorized, 468,000 shares issued)Excess of issue price over stated valueFor the Year Ended December 31, 20Y6From sale of treasury stockNet incomeNet lossRetained earningsRetained earnings, December 31, 20Y6Retained earnings, January 1, 20Y6Stock dividendsTotalTotal paid-in capitalTotal stockholders’ equityTreasury stock (30,000 shares at cost)

1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Post the journal entries from part 2 to the eight selected accounts.

13
14
15
21
21
3 Prepare a retained eamings statement for the year ended December 31, 20Y0. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Refer to the ist of Amount Descriptions provided for the exact wording of tme answer choices for text entries.
Question not attempted.
Morraw Enterprises
Retained Eamings Statement
Far the Year Ended December 31, 20Y6
4. Prepare the Stockhoiders' Equity section of the December 31, 20Y0, balance sheet For those boxes in which you must enter subtracted or negative numbers use a minus sign. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries
Question not attempted.
Stockhalders' Equity
1 Paid-in capital:

Common stock
Jan. 1 Bal, V
Apr. 10 v
Aug. 15 V
Dec. 31 Bal,
Pald-in Capital In Excees of Stated Value-Common Stock
Jan. 1 Bal. V
Apr. 10 V
Jul. 5 V
Dec. 31 Bal,
Retalned Earninge
Dec. 31 V
Jan. 1 Bal. V
Dec. 31 v
Dec. 31 Bal, V
Treasury Stock
Jan. 1 Bal, v
Jun. 6 V
Nov. 23 V
Dec. 31 Bal. V
Pald-In Capital from Sale of Treasury stock
Jun. 6 V
stock Dividende Dietributable
Aug. 15 V
Jul. 5 v
Stock Dividends
Jul, 5 V
Dec. 31 V
Caeh Dividende
Dec. 28 V
Dec. 31 v
2 Joumalize the entries to record the transactions. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles
Question not attempted.
PAGE 10
JOURNAL
ACCOUNTING EQUJATION
ASSETS
|LIABILITIES EQUITY
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT

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