Ch 13 - HW Extra Credit (Optional) Entries for Selected Corporate Transactions Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders' equity accounts of Morrow Enterprises Inc., with balances on January 1, 2045, are as follows: Common Stock $10 stated value (600,000 shares authorized, 400,000 shares issued) $4,000,000 Paid-In Capital in Excess of Stated Value-Common Stock 750,000 Retained Earnings 9,080,000 560,000 > Treasury Stock (40,000 shares, at cost) 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 precec fiscal year for $54,000. Apr. 10. Issued 75,000 shares of common stock for $1,200,000. June 6. Sold all of the treasury stock for $680,000. July 5. Declared a 5% 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 25,000 shares of treasury stock for $475,000 Dec. 28. Declared a $0.18-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $9,443,000, 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. 4,000,000 Apr. 10 750,000 Aug. 15 190,000 Dec. 31 Bal. 4,940,000 Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal 750,000 Apr. 10 600,000 July 5 190,000 Dec. 31 Bal 1,540,000 X Retained Earnings Dec. 31 380,000 X Jan. 1 Bal. 9,080,000 Dec. 31 9,443,000 Dec. 31 Bal. 18,067,960 X Treasury Stock Jan. 1 Bal. 560,000 June 6 560,000 Nov. 23 475,000 Dec. 31 Bal. 475,000 Paid-In Capital from Sale of Treasury Stock June 6 120,000 Stock Dividends Distributable Aug. 15 190,000 x July 5 190,000 Stock Dividends July 5 380,000 X Dec. 31 380,000 X Cash Dividends Dec. 28 75,040 X Dec. 31 75,040 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 $54,000. Date Account Debit Credit Date Account Debit Credit Jan. 22 Cash Dividends Payable 46,800 X Cash 46,800 X Apr. 10. Issued 75,000 shares of common stock for $1,200,000. Date Account Debit Credit Apr. 10 Cash 1,350,000 x Common Stock 750,000 Paid-in Capital in Excess of Stated Value-Common Stock 600,000 X June 6. Sold all of the treasury stock for $680,000. Date Account Debit Credit June 6 Cash 680,000 Treasury Stock 560,000 Paid-In Capital from Sale of Treasury Stock 120,000 July 5. Declared a 5% 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 380,000 Stock Dividends Distributable 190,000 X Paid-In Capital in Excess of Stated Value-Common Stock 190,000 Aug. 15. Issued the certificates for the dividend declared on July 5. Date Account Debit Credit Aug. 15 Stock Dividends Distributable 190,000 X Common Stock 190,000 X Nov. 23. Purchased 25,000 shares of treasury stock for $475,000. Date Account Debit Credit Nov. 23 Treasury Stock 475,000 Cash 475,000 Dec. 28. Declared a $0.18-per-share dividend on common stock. Date Account Debit Credit Dec. 28 Cash Dividends 75,040 X Cash Dividends Payable 75,040 X Dec. 31. Closed the credit balance of the income summary account, $9,443,000. Date Account Debit Credit Dec. 31 Income Summary 9,443,000 Retained Earnings 9,443,000 Dec. 31. Closed the two dividends accounts to Retained Earnings. Date Account Debit Credit Dec. 31 Retained Earnings 455,040 X Stock Dividends 75,040 X Cash Dividends 380,000 X 3. Prepare a retained earnings statement for the year ended December 31, 2015. Assume that Morrow Enterprises Inc. had net income for the year ended December 31, 2015, of $9,443,000. Stock Dividends 75,040 Cash Dividends 380,000 X 3. Prepare a retained earnings statement for the year ended December 31, 2045. Assume that Morrow Enterprises Inc. had net income for the year ended December 31, 2045, of $9,443,000. Morrow Enterprises Inc. Retained Earnings Statement For the Year Ended December 31, 2015 Retained Earnings, January 1, 2045 $ 9,080,000 Net Income 9,443,000 Dividends: Cash Dividends 75,040 X Stock Dividends 380,000 X Increase in Retained Earnings 8,987,960 Retained Earnings, December 31, 2015 18,067,960 4. Prepare the Stockholders' Equity section of the December 31, 2045, balance sheet. Morrow Enterprises Inc. Stockholders' Equity As of December 31, 2015 Paid-In-Capital: Common Stock, $10 Stated Value 4,940,000 X Excess of Stated Value-Common Stock 1,540,000 Paid-in capital, common stock 120,000 Total Paid-in Capital $ 6,600,000 x Retained Earnings 18,067,960 Total 24,667,960 x Treasury Stock (at Cost) 475,000 Total Stockholders' Equity 24,192,960 X Feedback Check My Work 1 & 2 The purchase of treasury stock is typically recorded