Entries for selected corporate transactions

Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders$$ equity accounts of Morrow Enterprises Inc., with balances on January $1,20$Y$5,$ are as follows:

Common stock, $$20$ stated value $(500,000$ shares authorized, $399,000$ shares issued$)$ $$7,980,000$

Paid$-$In Capital in Excess of Stated Value$$Common Stock $877,800$

Retained Earnings $34,554,000$

Treasury Stock $(22,500$ shares, at a cost of $$17$ per share$)382,500$

The following selected transactions occurred during the year:

Jan. $22$ Paid cash dividends of $$0\mathrm{.}07$ per share on the common stock. The dividend had been properly recorded when declared on December $1$ of the preceding fiscal year for $$26,355.$

Apr. $10$ Issued $73,000$ shares of common stock for $$23$ per share.

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

Jul. $5$ Declared a $2\%$ stock dividend on common stock, to be capitalized at the market price of the stock, which is $$24$ per share.

Aug. $15$ Issued the certificates for the dividend declared on July $5.$

Nov. $23$ Purchased $30,000$ shares of treasury stock for $$20$ per share.

Dec. $28$ Declared a $$0\mathrm{.}09-$per$-$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. Also prepare T accounts for the following: Paid$-$In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.

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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your final answer to the nearest dollar.

c$.$ Prepare a retained earnings statement for the year ended December $31,20$Y$5.$ Assume that Morrow Enterprises had net income for the year ended December $31,20$Y$5,$ of $$1,162,500.$ Be sure to complete the statement heading. Refer to the chart of accounts and the lists of Labels and Amount Descriptions for the exact wording of text entries. A decrease to retained earnings should be entered as a negative amount.

d$.$ Prepare the Stockholders$$ Equity section of the December $31,20$Y$5,$ balance sheet. Refer to the chart of accounts and the lists of Labels and Amount Descriptions for the exact wording of text entries. For those boxes in which you must enter subtractive or negative numbers, use a minus sign.

a$.$ 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. No post ref is required in the journal.

Common Stock

Paid$-$In Capital in Excess of Stated Value$-$Common Stock

Retained Earnings

Treasury Stock

Paid$-$In Capital from Sale of Treasury Stock

Stock Dividends Distributable

Stock Dividends

Cash Dividends

Points:

$0/46$

Check My Work

The purchase of Treasury Stock is typically recorded using the cost method. When the company resells shares of Treasury Stock pay attention to the price these shares are being sold for and the price originally paid to reacquire these shares. On the date of declaration of a cash dividend, the corporation is legally obligated to pay that dividend. When the company declares a cash or stock dividend keep in mind the previous stock transactions that have occurred; would these transactions have any affect on the amount of the cash dividend?

b$.$ Journalize the entries to record the transactions. No post ref is required in the journal. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your final answer to the nearest dollar.

How does grading work?

PAGE $10$

JOURNALACCOUNTING EQUATION

Score: $167/249$

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

Jan. $22$

Cash Dividends Payable

$26,355\mathrm{.}00$

$$

Cash

$26,355\mathrm{.}00$

$$

Apr. $10$

Cash

$1,679,000\mathrm{.}00$

$$

Common Stock

$9,440\mathrm{.}00$

$$

Paid$-$In Capital in Excess of Stated Value$-$Common Stock

$9,440\mathrm{.}00$

$$

Jun. $6$

Cash

Treasury Stock

Paid$-$In Capital in Excess of Par$-$Preferred Stock

Jul. $5$

Stock Dividends

Stock Dividends Distributable

Paid$-$In Capital in Excess of Stated Value$-$Common Stock

Aug. $15$

Stock Dividends Distributable

Common Stock

Nov. $23$

Treasury Stock

Cash

Dec. $28$

Cash Dividends

Stock Dividends Distributable

Dec. $31$

Retained Earnings