Question
Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises stockholders equity accounts, with balances on January 1, 20Y6, are as follows: Common stock, $20 stated value
Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises stockholders equity accounts, with balances on January 1, 20Y6, are as follows:
Common stock, $20 stated value (500,000 shares authorized, 363,000 shares issued) | $7,260,000 |
Paid-In Capital in Excess of Stated ValueCommon Stock | 834,900 |
Retained Earnings | 32,541,000 |
Treasury Stock (25,900 shares, at cost) | 492,100 |
The following selected transactions occurred during the year:
Jan. | 22 | Paid cash dividends of $0.09 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $30,339. |
Apr. | 10 | Issued 80,000 shares of common stock for $23 per share. |
Jun. | 6 | Sold all of the treasury stock for $25 per share. |
Jul. | 5 | Declared a 3% Stock dividend on common stock, to be capitalized at the market price of the stock, which is $26 per share. |
Aug. | 15 | Issued the certificates for the dividend declared on July 5. |
Nov. | 23 | Purchased 33,000 shares of treasury stock for $19 per share. |
Dec. | 28 | Declared a $0.10-per-share dividend on common stock. |
31 | Closed the two dividends accounts to Retained Earnings. |
Required: | |||
1. | Enter the January 1 balances in T accounts for the stockholders equity accounts listed. If required, round your answers to the nearest dollar. | ||
2. | Journalize the entries to record the transactions, and post to the eight selected accounts. Assume that the closing entry for revenues and expenses has been made and post net income of $1,218,500 to the retained earnings account. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar. | ||
3. | Prepare a statement of stockholders equity for the year ended December 31, 20Y6. Assume that net income was $1,218,500 for the year ended December 31, 20Y6. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is an amount is zero, enter "0".* | ||
4. | Prepare the Stockholders Equity section of the December 31, 20Y6, balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign.*
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Chart of Accounts
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General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Amount Descriptions
Amount Descriptions | |
Balances, January 1 | |
Balances, December 31 | |
Cash dividends | |
Common stock, $20 stated value (500,000 shares authorized, 456,290 shares issued) | |
Excess of issue price over stated value | |
From sale of treasury stock | |
Issued common stock | |
Net income | |
Net loss | |
Purchase of treasury stock | |
Sale of treasury stock | |
Stock dividends | |
Retained Earnings | |
Total | |
Total paid-in capital | |
Total stockholders equity | |
Treasury stock (33,000 shares at cost) |
T Accounts
1. Enter the January 1 balances in T accounts for the stockholders equity accounts listed. Post the journal entries from part 2 to the eight selected accounts. If required, round your answers to the nearest dollar.
Common Stock | |||
Jan. 1 Bal. | |||
Apr. 10 | |||
Aug. 15 | |||
Dec. 31 Bal. |
Paid-In Capital in Excess of Stated Value-Common Stock | |||
Jan. 1 Bal. | |||
Apr. 10 | |||
Jul. 5 | |||
Dec. 31 Bal. |
Retained Earnings | |||
Dec. 31 | Jan. 1 Bal. | ||
Dec. 31 | |||
Dec. 31 Bal. |
Treasury Stock | |||
Jan. 1 Bal. | Jun. 6 | ||
Nov. 23 | |||
Dec. 31 Bal. |
Paid-In Capital from Sale of Treasury Stock | |||
Jun. 6 |
Stock dividends Distributable | |||
Aug. 15 | Jul. 5 |
Stock dividends | |||
Jul. 5 | Dec. 31 |
Cash Dividends | |||
Dec. 28 | Dec. 31 |
Statement of Stockholders Equity
3. Prepare a statement of stockholders equity for the year ended December 31, 20Y6. Assume that net income was $1,218,500 for the year ended December 31, 20Y6. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is an amount is zero, enter "0". Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.
Morrow Enterprises Inc. |
Statement of Stockholders Equity |
For the Year Ended December 31, 20Y6 |
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Stockholders Equity
4. Prepare the Stockholders Equity section of the December 31, 20Y6 balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.
Morrow Enterprises Inc. |
Balance Sheet |
December 31, 20Y6 |
1 | Stockholders' Equity |
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2 | Paid-in capital: |
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