Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders equity accounts of Morrow Enterprises Inc., with balances on

Question:

Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2016, are as follows:

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.
June 6. Sold all of the treasury stock for $26 per share.
July 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.

Instructions
1. 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.
2. Journalize the entries to record the transactions, and post to the eight selected accounts.
3. Prepare a retained earnings statement for the year ended December 31, 2016.
4. Prepare the Stockholders’ Equity section of the December 31, 2016, balance sheet.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting

ISBN: 978-1285743615

26th edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

Question Posted: