Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2016, 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 the certificates for the 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: 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, 2016. Enter all amounts as positive numbers. The word “Less” is not required.*

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, 2016, 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 the certificates for the 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:
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, 2016. Enter all amounts as positive numbers. The word “Less” is not required.*
D.	Prepare the Stockholders’ Equity section of the December 31, 2016, balance sheet. “Less” or “Deduct” will automatically appear if it is requir

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