Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 20Y5, are as follows:Common stock, $20 stated value (500,000 shares authorized, 353,000 shares issued)$7,060,000Paid-In Capital in Excess of Stated Value—Common Stock811,900Retained Earnings33,598,000Treasury Stock (25,500 shares, at a cost of $19 per share)484,500 The following selected transactions occurred during the year:Jan.22Paid cash dividends of $0.10 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $32,750.Apr.10Issued 72,000 shares of common stock for $24 per share.Jun.6Sold all of the treasury stock for $25 per share.Jul.5Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $26 per share.Aug.15Issued the certificates for the dividend declared on July 5.Nov.23Purchased 25,000 shares of treasury stock for $19 per share.Dec.28Declared a $0.09-per-share dividend on common stock. 31Closed the two dividends accounts to Retained Earnings. Required:a.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.b.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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your final answer to the nearest dollar.c.Prepare a retained earnings statement for the year ended December 31, 20Y5. Assume that Morrow Enterprises had net income for the year ended December 31, 20Y5, of $1,149,500. Be sure to complete the statement heading. A decrease to retained earnings should be entered as a negative amount.d.Prepare the Stockholders’ Equity section of the December 31, 20Y5, balance sheet. For those boxes in which you must enter subtractive or negative numbers, use a minus sign.

Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If you want remaining sub-parts to be solved, then please resubmit the whole question and specify those sub-parts you want us to solve.Following are the T accounts:Part 2: Journal entries will be: Part 3: Formulae used to prepare retained earnings statement: Preparation of retained earnings statement:

Answered: Morrow Enterprises Inc. manufactures…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 5MCQ

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Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 20Y5, are as follows:

Common stock, $20 stated value (500,000 shares authorized, 353,000 shares issued)	$7,060,000
Paid-In Capital in Excess of Stated Value—Common Stock	811,900
Retained Earnings	33,598,000
Treasury Stock (25,500 shares, at a cost of $19 per share)	484,500

The following selected transactions occurred during the year:

Jan.	22	Paid cash dividends of $0.10 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $32,750.
Apr.	10	Issued 72,000 shares of common stock for $24 per share.
Jun.	6	Sold all of the treasury stock for $25 per share.
Jul.	5	Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $26 per share.
Aug.	15	Issued the certificates for the dividend declared on July 5.
Nov.	23	Purchased 25,000 shares of treasury stock for $19 per share.
Dec.	28	Declared a $0.09-per-share dividend on common stock.
	31	Closed the two dividends accounts to Retained Earnings.

Required:

a.	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.
b.	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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your final answer to the nearest dollar.
c.	Prepare a retained earnings statement for the year ended December 31, 20Y5. Assume that Morrow Enterprises had net income for the year ended December 31, 20Y5, of $1,149,500. Be sure to complete the statement heading. A decrease to retained earnings should be entered as a negative amount.
d.	Prepare the Stockholders’ Equity section of the December 31, 20Y5, balance sheet. For those boxes in which you must enter subtractive or negative numbers, use a minus sign.

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