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 (650,000 shares authorized, 420,000 shares issued) $4,200,000 Paid-In Capital in Excess of Stated Value-Common Stock 800,000 Retained Earnings 9,530,000 Treasury Stock (42,000 shares, at cost) 588,000 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 $52,920. Apr. 10. Issued 80,000 shares of common stock for $1,280,000. June 6. Sold all of the treasury stock for $714,000. July 5. Declared a 4% 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 26,000 shares of treasury stock for $494,000. Dec. 28. Declared a $0.17-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $9,911,000. 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. 4,200,000 Apr. 10 Aug. 15 Dec. 31 Bal. Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal. 800,000 Apr. 10 July 5 Dec. 31 Bal. Retained Earnings Dec. 31 Jan. 1 Bal. 9,530,000 Dec. 31 Dec. 31 Bal. Treasury Stock Jan. 1 Bal. 588,000 June 6 Nov. 23 Dec. 31 Bal. Paid-In Capital from Sale of Treasury Stock June 6 Stock Dividends Distributable Aug. 15 July 5 Stock Dividends July 5 Dec. 31 Cash Dividends Dec. 28 Dec. 31 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 $0.14 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $52,920. Date Account Debit Credit Jan. 22 Cash Dividends Cash Apr. 10. Issued 80,000 shares of common stock for $1,280,000. Date Account Debit Credit Apr. 10 Cash Common Stock Paid-In Capital in Excess of Stated Value-Common Stock June 6. Sold all of the treasury stock for $714,000. Date Account Debit Credit June 6 Cash Treasury Stock II Paid-In Capital from Sale of Treasury Stock July 5. Declared a 4% 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 Stock Dividends Distributable 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 Common Stock Nov. 23. Purchased 26,000 shares of treasury stock for $494,000. Date Account Debit Credit Nov. 23 Treasury Stock Cash A Dec. 28. Declared a $0.17-per-share dividend on common stock. Date Account Debit Credit Dec. 28 Cash Dividends Cash Dividends Payable Dec. 31. Closed the credit balance of the income summary account, $9,911,000. Date Account Debit Credit Dec. 31 Income Summary Retained Earnings Dec. 31. Closed the two dividends accounts to Retained Earnings. Date Account Debit Credit Dec. 31 Retained Earnings - Stock Dividends Cash Dividends 3. Prepare a retained earnings statement for the year ended December 31, 20Y5. Assume that Morrow Enterprises Inc. had net income for the year ended December 31, 2045, of $9,911,000. Morrow Enterprises Inc. Retained Earnings Statement For the Year Ended December 31, 2045 Retained Earnings, January 1, 2045 S 9,530,000 Net Income 9,911,000 Dividends: Cash Dividends 89,820 X Stock Dividends 500,000 x Increase in Retained Earnings - 9,321,180 X Retained Earnings, December 31, 2045 18,851,180 X 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 5,250,000 x Excess of Stated Value-Common Stock - 1,690,000 X Paid-in capital, common stock $ 7,066,000 X From Sale of Treasury Stock 18,851,18 x Total Paid-In Capital $ 7,066,000 Retained Earnings 18,851,180 x Total $ 25,917,180 X Treasury Stock (at Cost) 494,000 Total Stockholders' Equity 25,423,180 X
