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, $10 stated value (750,000 shares authorized, 500,000 shares issued) $5,000,000 Paid-In Capital in Excess of Stated Value-Common Stock 950,000 Retained Earnings 11,350,000 Treasury Stock (50,000 shares, at cost) 750,000 The following selected transactions occurred during the year: Jan. 22. Paid cash dividends of $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $67,500. Apr. 10. Issued 95,000 shares of common stock for $1,520,000. June 6. Sold all of the treasury stock for $900,000. July 5. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share. Aug. 15. Issued the certificates for the dividend declared on July 5. Nov. 23. Purchased 31,000 shares of treasury stock for $620,000. Dec. 28. Declared a $0.18-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $11,804,000. 31. Closed the two dividends accounts to Retained Earnings. Required: 1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate. Common Stock Jan. 1 Bal. 5,000,000 Apr. 10 Aug. 15 Dec. 31 Bal. Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal. 950,000 Apr. 10 July 5 Dec. 31 Bal. Retained Earnings Dec. 31 Jan. 1 Bal. 11,350,000 Dec. 31 Bal. Treasury Stock Jan. 1 Bal. 750,000 June 6 Nov. 23 Dec. 31 Bal. Paid-In Capital from Sale of Treasury Stock June 6 Stock Dividends Distributable Aug. 15 fill in the blank 24 July 5 fill in the blank 26 Stock Dividends July 5 Dec. 31 Cash Dividends Dec. 28 Dec. 31 2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Jan. 22. Paid cash dividends of $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $67,500. Date Account Debit Credit Jan. 22 Cash Dividends Payable Cash Apr. 10. Issued 95,000 shares of common stock for $1,520,000. Date Account Debit Credit Apr. 10 Cash Common Stock Paid-In Capital in Excess of Stated Value-Common Stock June 6. Sold all of the treasury stock for $900,000. Date Account Debit Credit June 6 Cash fill in the blank 49 fill in the blank 50 Treasury Stock fill in the blank 52 fill in the blank 53 Paid-In Capital from Sale of Treasury Stock fill in the blank 55 fill in the blank 56 July 5. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share. Date Account Debit Credit July 5 Stock Dividends Stock Dividends Distributable Paid-In Capital in Excess of Stated Value-Common Stock Aug. 15. Issued the certificates for the dividend declared on July 5. Date Account Debit Credit Aug. 15 Nov. 23. Purchased 31,000 shares of treasury stock for $620,000. Date Account Debit Credit Nov. 23 Dec. 28. Declared a $0.18-per-share dividend on common stock. Date Account Debit Credit Dec. 28 Dec. 31. Closed the credit balance of the income summary account, $11,804,000. Date Account Debit Credit Dec. 31 Dec. 31. Closed the two dividends accounts to Retained Earnings. Date Account Debit Credit Dec. 31 3. Prepare a retained earnings statement for the year ended December 31, 20Y5. Assume that Morrow Enterprises Inc. had net income for the year ended December 31, 20Y5, of $11,804,000.

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, $10 stated value (750,000 shares authorized, 500,000 shares issued) $5,000,000 Paid-In Capital in Excess of Stated Value-Common Stock 950,000 Retained Earnings 11,350,000 Treasury Stock (50,000 shares, at cost) 750,000 The following selected transactions occurred during the year: Jan. 22. Paid cash dividends of $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $67,500. Apr. 10. Issued 95,000 shares of common stock for $1,520,000. June 6. Sold all of the treasury stock for $900,000. July 5. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share. Aug. 15. Issued the certificates for the dividend declared on July 5. Nov. 23. Purchased 31,000 shares of treasury stock for $620,000. Dec. 28. Declared a $0.18-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $11,804,000. 31. Closed the two dividends accounts to Retained Earnings. Required: 1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate. Common Stock Jan. 1 Bal. 5,000,000 Apr. 10 Aug. 15 Dec. 31 Bal. Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal. 950,000 Apr. 10 July 5 Dec. 31 Bal. Retained Earnings Dec. 31 Jan. 1 Bal. 11,350,000 Dec. 31 Bal. Treasury Stock Jan. 1 Bal. 750,000 June 6 Nov. 23 Dec. 31 Bal. Paid-In Capital from Sale of Treasury Stock June 6 Stock Dividends Distributable Aug. 15 fill in the blank 24 July 5 fill in the blank 26 Stock Dividends July 5 Dec. 31 Cash Dividends Dec. 28 Dec. 31 2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Jan. 22. Paid cash dividends of $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $67,500. Date Account Debit Credit Jan. 22 Cash Dividends Payable Cash Apr. 10. Issued 95,000 shares of common stock for $1,520,000. Date Account Debit Credit Apr. 10 Cash Common Stock Paid-In Capital in Excess of Stated Value-Common Stock June 6. Sold all of the treasury stock for $900,000. Date Account Debit Credit June 6 Cash fill in the blank 49 fill in the blank 50 Treasury Stock fill in the blank 52 fill in the blank 53 Paid-In Capital from Sale of Treasury Stock fill in the blank 55 fill in the blank 56 July 5. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share. Date Account Debit Credit July 5 Stock Dividends Stock Dividends Distributable Paid-In Capital in Excess of Stated Value-Common Stock Aug. 15. Issued the certificates for the dividend declared on July 5. Date Account Debit Credit Aug. 15 Nov. 23. Purchased 31,000 shares of treasury stock for $620,000. Date Account Debit Credit Nov. 23 Dec. 28. Declared a $0.18-per-share dividend on common stock. Date Account Debit Credit Dec. 28 Dec. 31. Closed the credit balance of the income summary account, $11,804,000. Date Account Debit Credit Dec. 31 Dec. 31. Closed the two dividends accounts to Retained Earnings. Date Account Debit Credit Dec. 31 3. Prepare a retained earnings statement for the year ended December 31, 20Y5. Assume that Morrow Enterprises Inc. had net income for the year ended December 31, 20Y5, of $11,804,000.

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

Common Stock, $10 stated value (750,000 shares authorized, 500,000 shares issued)	$5,000,000
Paid-In Capital in Excess of Stated Value-Common Stock	950,000
Retained Earnings	11,350,000
Treasury Stock (50,000 shares, at cost)	750,000

The following selected transactions occurred during the year:

Jan. 22.	Paid cash dividends of $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $67,500.
Apr. 10.	Issued 95,000 shares of common stock for $1,520,000.
June 6.	Sold all of the treasury stock for $900,000.
July 5.	Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.
Aug. 15.	Issued the certificates for the dividend declared on July 5.
Nov. 23.	Purchased 31,000 shares of treasury stock for $620,000.
Dec. 28.	Declared a $0.18-per-share dividend on common stock.
31.	Closed the credit balance of the income summary account, $11,804,000.
31.	Closed the two dividends accounts to Retained Earnings.

Required:

1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate.

Common Stock
		Jan. 1 Bal.	5,000,000
		Apr. 10
		Aug. 15
		Dec. 31 Bal.

Paid-In Capital in Excess of Stated Value-Common Stock
		Jan. 1 Bal.	950,000
		Apr. 10
		July 5
		Dec. 31 Bal.

Retained Earnings
Dec. 31	Jan. 1 Bal.	11,350,000

	Dec. 31 Bal.

Treasury Stock
Jan. 1 Bal.	750,000	June 6
Nov. 23
Dec. 31 Bal.

Paid-In Capital from Sale of Treasury Stock
		June 6

Stock Dividends Distributable
Aug. 15	fill in the blank 24	July 5	fill in the blank 26

Stock Dividends
July 5		Dec. 31

Cash Dividends
Dec. 28		Dec. 31

2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.

Jan. 22. Paid cash dividends of $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $67,500.

Date	Account	Debit	Credit
Jan. 22	Cash Dividends Payable
	Cash

Apr. 10. Issued 95,000 shares of common stock for $1,520,000.

Date	Account	Debit	Credit
Apr. 10	Cash
	Common Stock
	Paid-In Capital in Excess of Stated Value-Common Stock

June 6. Sold all of the treasury stock for $900,000.

Date	Account	Debit	Credit
June 6	Cash	fill in the blank 49	fill in the blank 50
	Treasury Stock	fill in the blank 52	fill in the blank 53
	Paid-In Capital from Sale of Treasury Stock	fill in the blank 55	fill in the blank 56

July 5. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.

Date	Account	Debit	Credit
July 5	Stock Dividends
	Stock Dividends Distributable
	Paid-In Capital in Excess of Stated Value-Common Stock

Aug. 15. Issued the certificates for the dividend declared on July 5.

Date	Account	Debit	Credit
Aug. 15

Nov. 23. Purchased 31,000 shares of treasury stock for $620,000.

Date	Account	Debit	Credit
Nov. 23

Dec. 28. Declared a $0.18-per-share dividend on common stock.

Date	Account	Debit	Credit
Dec. 28

Dec. 31. Closed the credit balance of the income summary account, $11,804,000.

Date	Account	Debit	Credit
Dec. 31

Dec. 31. Closed the two dividends accounts to Retained Earnings.

Date	Account	Debit	Credit
Dec. 31

3. Prepare a retained earnings statement for the year ended December 31, 20Y5. Assume that Morrow Enterprises Inc. had net income for the year ended December 31, 20Y5, of $11,804,000.

4. Prepare the Stockholders' Equity section of the December 31, 20Y5, balance sheet.

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