Question
Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises stockholders equity accounts, with balances on January 1, 20Y6, are as follows: Common Stock, $10 stated value
Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises stockholders equity accounts, with balances on January 1, 20Y6, are as follows:
Common Stock, $10 stated value (700,000 shares authorized, 460,000 shares issued) | $4,600,000 |
Paid-In Capital in Excess of Stated Value-Common Stock | 850,000 |
Retained Earnings | 10,440,000 |
Treasury Stock (46,000 shares, at cost) | 644,000 |
The following selected transactions occurred during the year:
Jan. 22. | Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $53,820. |
Apr. 10. | Issued 85,000 shares of common stock for $1,360,000. |
June 6. | Sold all of the treasury stock for $17 per share. |
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 shares of stock for the stock dividend declared on July 5. |
Nov. 23. | Purchased 29,000 shares of treasury stock for $19 per share. |
Dec. 28. | Declared a $0.16-per-share dividend on common stock. |
31. | Closed the credit balance of the income summary account, $10,858,000. |
31. | Closed the two dividends accounts to Retained Earnings. |
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. If required, round to one decimal place.
Common Stock | |||
---|---|---|---|
Jan. 1 Bal. | 4,600,000 | ||
Dec. 31 Bal. |
Paid-In Capital in Excess of Stated Value-Common Stock | |||
---|---|---|---|
Jan. 1 Bal. | 850,000 | ||
Dec. 31 Bal. |
Retained Earnings | |||
---|---|---|---|
Jan. 1 Bal. | 10,440,000 | ||
Dec. 31 Bal. |
Treasury Stock | |||
---|---|---|---|
Jan. 1 Bal. | 644,000 | ||
Dec. 31 Bal. |
Paid-In Capital from Sale of Treasury Stock | |||
---|---|---|---|
Stock Dividends Distributable | |||
---|---|---|---|
Stock Dividends | |||
---|---|---|---|
Cash Dividends | |||
---|---|---|---|
|
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 $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $53,820.
Date | Account | Debit | Credit |
---|---|---|---|
Jan. 22 | |||
Apr. 10. Issued 85,000 shares of common stock for $1,360,000.
Date | Account | Debit | Credit |
---|---|---|---|
Apr. 10 | |||
June 6. Sold all of the treasury stock for $17 per share.
Date | Account | Debit | Credit |
---|---|---|---|
June 6 | |||
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 | |||
Aug. 15. Issued shares of stock for the dividend declared on July 5.
Date | Account | Debit | Credit |
---|---|---|---|
Aug. 15 | |||
Nov. 23. Purchased 29,000 shares of treasury stock for $19 per share.
Date | Account | Debit | Credit |
---|---|---|---|
Nov. 23 | |||
Dec. 28. Declared a $0.16-per-share dividend on common stock.
Date | Account | Debit | Credit |
---|---|---|---|
Dec. 28 | |||
Dec. 31. Closed the credit balance of the income summary account, $10,858,000.
Date | Account | Debit | Credit |
---|---|---|---|
Dec. 31 | |||
Dec. 31. Closed the two dividends accounts to Retained Earnings.
Date | Account | Debit | Credit |
---|---|---|---|
Dec. 31 | |||
3. Prepare a retained earnings statement for the year ended December 31, 20Y6.
Morrow Enterprises Inc. Retained Earnings Statement For the Year Ended December 31, 20Y6 | ||
---|---|---|
4. Prepare the Stockholders' Equity section of the December 31, 20Y6, balance sheet.
Morrow Enterprises Inc. Balance Sheet December 31, 20Y6 | ||
---|---|---|
Stockholders' Equity | ||
Paid-In-Capital: | ||
Total Paid-In Capital | ||
Total | ||
Total Stockholders' Equity |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started