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, 367,000 shares issued)	$7,340,000
Paid-In Capital in Excess of Stated ValueCommon Stock	844,100
Retained Earnings	33,388,000
Treasury Stock (22,800 shares, at cost)	387,600

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 $30,978.
Apr.	10	Issued 71,000 shares of common stock for $23 per share.
Jun.	6	Sold all of the treasury stock for $27 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 28,000 shares of treasury stock for $18 per share.
Dec.	28	Declared a $0.09-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 $1,131,500 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 $1,131,500 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.*

* Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Chart of Accounts

CHART OF ACCOUNTS

Morrow Enterprises Inc.

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Inventory
145	Office Supplies
151	Prepaid Insurance
181	Land
193	Equipment
194	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
226	Interest Payable
231	Cash Dividends Payable
241	Salaries Payable
261	Mortgage Note Payable

	EQUITY
236	Stock dividends Distributable
311	Common Stock
313	Paid-In Capital in Excess of Stated Value-Common Stock
315	Treasury Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
351	Cash Dividends
352	Stock dividends

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
515	Credit Card Expense
520	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Selling Expenses
534	Rent Expense
535	Insurance Expense
536	Office Supplies Expense
537	Organizational Expenses
562	Depreciation Expense-Equipment
590	Miscellaneous Expense
710	Interest Expense

Amount Descriptions

Amount Descriptions
Balances, January 1
Balances, December 31
Cash dividends
Common stock, $20 stated value (500,000 shares authorized, 451,140 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 (28,000 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.

Paid-In Capital in Excess of Stated Value-Common Stock
		Jan. 1 Bal.

Retained Earnings
Jan. 1 Bal.		Jan. 1 Bal.

Treasury Stock
Jan. 1 Bal.		Jan. 1 Bal.

Paid-In Capital from Sale of Treasury Stock

Stock dividends Distributable
Jan. 1 Bal.

Stock dividends

Cash Dividends
Dec. 31 Bal.		Dec. 31

Journal

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 $1,131,500 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.

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JOURNAL

ACCOUNTING EQUATION