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, 363,000 shares issued) $7,260,000 Paid-In Capital in Excess of Stated Value—Common Stock 834,900 Retained Earnings 32,541,000 Treasury Stock (25,900 shares, at a cost of $19 per share) 492,100 The following selected transactions occurred during the year: Jan. 22 Paid cash dividends of $0.09 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $30,339. Apr. 10 Issued 80,000 shares of common stock for $23 per share. Jun. 6 Sold all of the treasury stock for $25 per share. Jul. 5 Declared a 3% 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 33,000 shares of treasury stock for $19 per share. Dec. 28 Declared a $0.10-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. 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 exact wording of account titles. 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 $1,218,500. For those boxes in which you must enter subtractive or negative numbers use a minus sign. The word “Less” is not required.* 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.* *Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. CHART OF ACCOUNTS Morrow Enterprises Inc. General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise 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 Amount Descriptions Cash balance, July 31, 20Y5 Cash dividends Common stock, $20 stated value (500,000 shares authorized, 363,000 shares issued) Common stock, $20 stated value (500,000 shares authorized, 423,290 shares issued) Common stock, $20 stated value (500,000 shares authorized, 456,290 shares issued) Decrease in retained earnings Excess over stated value For the Year Ended December 31, 20Y5 From sale of treasury stock Increase in retained earnings Net income Net loss Paid-in capital, common stock Retained earnings Retained earnings, December 31, 20Y5 Retained earnings, January 1, 20Y5 Stock dividends Total Total paid-in capital Total stockholders’ equity Treasury stock

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, 363,000 shares issued) $7,260,000 Paid-In Capital in Excess of Stated Value—Common Stock 834,900 Retained Earnings 32,541,000 Treasury Stock (25,900 shares, at a cost of $19 per share) 492,100 The following selected transactions occurred during the year: Jan. 22 Paid cash dividends of $0.09 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $30,339. Apr. 10 Issued 80,000 shares of common stock for $23 per share. Jun. 6 Sold all of the treasury stock for $25 per share. Jul. 5 Declared a 3% 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 33,000 shares of treasury stock for $19 per share. Dec. 28 Declared a $0.10-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. 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 exact wording of account titles. 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 $1,218,500. For those boxes in which you must enter subtractive or negative numbers use a minus sign. The word “Less” is not required.* 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.* *Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. CHART OF ACCOUNTS Morrow Enterprises Inc. General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise 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 Amount Descriptions Cash balance, July 31, 20Y5 Cash dividends Common stock, $20 stated value (500,000 shares authorized, 363,000 shares issued) Common stock, $20 stated value (500,000 shares authorized, 423,290 shares issued) Common stock, $20 stated value (500,000 shares authorized, 456,290 shares issued) Decrease in retained earnings Excess over stated value For the Year Ended December 31, 20Y5 From sale of treasury stock Increase in retained earnings Net income Net loss Paid-in capital, common stock Retained earnings Retained earnings, December 31, 20Y5 Retained earnings, January 1, 20Y5 Stock dividends Total Total paid-in capital Total stockholders’ equity Treasury stock

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. 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, 363,000 shares issued)	$7,260,000
Paid-In Capital in Excess of Stated Value—Common Stock	834,900
Retained Earnings	32,541,000
Treasury Stock (25,900 shares, at a cost of $19 per share)	492,100

The following selected transactions occurred during the year:

Jan.	22	Paid cash dividends of $0.09 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $30,339.
Apr.	10	Issued 80,000 shares of common stock for $23 per share.
Jun.	6	Sold all of the treasury stock for $25 per share.
Jul.	5	Declared a 3% 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 33,000 shares of treasury stock for $19 per share.
Dec.	28	Declared a $0.10-per-share dividend on common stock.
	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, 20Y5. Assume that Morrow Enterprises had net income for the year ended December 31, 20Y5, of $1,218,500. For those boxes in which you must enter subtractive or negative numbers use a minus sign. The word “Less” is not required.*

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.*

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

CHART OF ACCOUNTS

Morrow Enterprises Inc.

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Merchandise 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

Amount Descriptions
Cash balance, July 31, 20Y5
Cash dividends
Common stock, $20 stated value (500,000 shares authorized, 363,000 shares issued)
Common stock, $20 stated value (500,000 shares authorized, 423,290 shares issued)
Common stock, $20 stated value (500,000 shares authorized, 456,290 shares issued)
Decrease in retained earnings
Excess over stated value
For the Year Ended December 31, 20Y5
From sale of treasury stock
Increase in retained earnings
Net income
Net loss
Paid-in capital, common stock
Retained earnings
Retained earnings, December 31, 20Y5
Retained earnings, January 1, 20Y5
Stock dividends
Total
Total paid-in capital
Total stockholders’ equity
Treasury stock

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