Entries for Selected Corporate Transactions

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 (500,000 shares authorized, 320,000 shares issued)	$3,200,000
Paid-In Capital in Excess of Stated Value-Common Stock	600,000
Retained Earnings	7,260,000
Treasury Stock (32,000 shares, at cost)	480,000

The following selected transactions occurred during the year:

Jan. 22.	Paid cash dividends of $0.14 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $40,320.
Apr. 10.	Issued 60,000 shares of common stock for $1,080,000.
June 6.	Sold all of the treasury stock for $576,000.
July 5.	Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is $20 per share.
Aug. 15.	Issued the certificates for the dividend declared on July 5.
Nov. 23.	Purchased 20,000 shares of treasury stock for $400,000.
Dec. 28.	Declared a $0.17-per-share dividend on common stock.
31.	Closed the credit balance of the income summary account, $7,550,000.
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.

eBook Calculator Common Stock Jan. 1 Bal. Apr. 107 3,200,000 600,000 190,000 3,990,000 Aug. 15 Dec. 31 Bal. Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal. Apr. 10 600,000 108,000 July 5 100,000 Dec. 31 Bal. 7,550,000 x Retained Earnings Dec. 31 7,550,000 x Jan. 1 Bal. Dec. 31 Dec. 31 Bal. 7,260,000 7,550,000 14,810,000 x eBook Calculator Treasury Stock 480,000 June 6 400,000 Jan. 1 Bal. 480,000 Nov. 23 Dec. 31 Bal. 7,550,00 Paid-In Capital from Sale of Treasury Stock June 6 96,000 1 Aug. 15 v Stock Dividends Distributable 190,000 July 5 190,000 Stock Dividends July 5 302,000 Dec. 31 302,000 Cash Dividends 7,550,000 * Dec. 31 V Dec. 28 7,500,000 x 2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an Jan. 22. Paid cash dividends of $0.14 per share on the common stock. The dividend had been properly recorded when of the preceding fiscal year for $40,320. Date Credit Account Cash Dividends Payable Debit 43,200 x Jan. 22 Cash 43,200 X Apr. 10. Issued 60,000 shares of common stock for $1,080,000. Account Debit Credit Date Apr. 10 Cash 960,000 O Common Stock 0 0 600,000 360,000 x Paid-In Capital in Excess of Stated Value-Common Stock June 6. Sold all of the treasury stock for $576,000. Date Account Debit Credit Check My Work Omore Check My Work uses remaining, eBook Calculator June 6. Sold all of the treasury stock for $570,000. Date Account Cred Debit 576,000 June 6 Cash 480,00 Treasury Stock Paid-In Capital from Sale of Treasury Stock o 96,000 July 5. Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is Date Account Debit Credi July 5 Stock Dividends Stock Dividends Distributable 342,000 X 0 o 190,000 152,000 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 Stock Dividends Distributable 190,000 Common Stock 190,000 eBook Calculator Date Account Debit Credit Dec. 31 Retained Earnings 0 Stock Dividends Cash Dividends o 3. Prepare a retained earnings statement for the year ended December 31, 2015. Assume that Morrow Enterprises year ended December 31, 2045, of $7,550,000. Morrow Enterprises Inc. Retained Earnings Statement For the Year Ended December 31, 2045 Retained Earnings, January 1, 2015 $ 7,260,000 Net Income $ 7,550,000 Dividends: Cash Dividends Stock Dividends 0 x Increase in Retained Earnings Retained Earnings, December 31, 2015 eBook Calculator Treasury Stock 480,000 June 6 400,000 Jan. 1 Bal. 480,000 Nov. 23 Dec. 31 Bal. 7,550,00 Paid-In Capital from Sale of Treasury Stock June 6 96,000 Aug. 15 v Stock Dividends Distributable 190,000 July 5 190,000 Stock Dividends July 5 302,000 Dec. 31 302,000 Cash Dividends 7,550,000 Dec. 31 Dec. 28 7,500,000 x eBook Calculator 4. Prepare the Stockholders' Equity section of the December 31, 2045, balance sheet. Morrow Enterprises Inc. Stockholders' Equity As of December 31, 2045 Paid-In-Capital: Common Stock, $10 Stated Value $ 3,990,000 Excess of Stated Value-Common Stock 1,112,000 Cash X $ x 96,000 96,000 From Sale of Treasury Stock Total Paid-In Capital $ 5,198,000 X Retained Earnings 480,000 Total $ 19,597,780 x Treasury Stock (at Cost) 380,000 Total Stockholders' Equity 19,217,780 Feedback