Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders equity accounts of Morrow Enterprises Inc., with balances on January 1, 2016, are as follows:

Common stock, $20 stated value; 500,000 shares authorized, 353,000 issued	$7,060,000
Paid-In Capital in Excess of Stated ValueCommon Stock	811,900
Retained Earnings	33,598,000
Treasury Stock (25,500 shares, at cost)	484,500

The following selected transactions occurred during the year:

Jan.	22	Paid cash dividends of $0.10 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $32,750.
Apr.	10	Issued 72,000 shares of common stock for $24 per share.
Jun.	6	Sold all of the treasury stock for $25 per share.
Jul.	5	Declared a 4% 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 25,000 shares of treasury stock for $19 per share.
Dec.	28	Declared a $0.09-per-share dividend on common stock.
	31	Closed the credit balance of the income summary account, $1,149,500.
	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.

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 exact wording of account titles.

C.

Prepare a retained earnings statement for the year ended December 31, 2016. Enter all amounts as positive numbers. The word Less is not required.*

D.

Prepare the Stockholders Equity section of the December 31, 2016, balance sheet. Less or Deduct will automatically appear if it is required. *

* 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	Merchandise 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
236	Stock Dividends Distributable
241	Salaries Payable
261	Mortgage Note Payable

	EQUITY
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
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise 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
Cash balance, July 31, 2016
Common stock, $20 stated value; 500,000 shares authorized, 353,000 issued
Common stock, $20 stated value; 500,000 shares authorized, 417,000 issued
Common stock, $20 stated value; 500,000 shares authorized, 442,000 issued
Decrease in retained earnings
Dividends
Excess of issue price over stated value
For the Year Ended December 31, 2016
From sale of treasury stock
Increase in retained earnings
Net income
Net loss
Retained earnings
Retained earnings, December 31, 2016
Retained earnings, January 1, 2016
Total
Total paid-in capital
Total stockholders equity

T Accounts

A. Enter the January 1 balances in T accounts for the stockholders equity accounts listed. Post the journal entries from part B to the eight selected accounts. 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

Journal

B. Journalize the entries to record the transactions. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

Retained Earnings Statement

C. Prepare a retained earnings statement for the year ended December 31, 2016. Enter all amounts as positive numbers. The word Less is not required. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Morrow Enterprises

Retained Earnings Statement

For the Year Ended December 31, 2016

1
2
3
4
5

Stockholders Equity

D. Prepare the Stockholders Equity section of the December 31, 2016 balance sheet. Less or Deduct will automatically appear if it is required. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Stockholders Equity

1	Paid-in capital:
2
3
4
5
6
7
8
9

120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise 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 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 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 390 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise 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 Cash balance, July 31, 2016 Common stock, $20 stated value; 500,000 shares authorized, 353,000 issued Common stock, $20 stated value; 500,000 shares authorized, 417,000 issued Common stock, $20 stated value; 500,000 shares authorized, 442,000 issued Decrease in retained earnings Dividends Excess of issue price over stated value For the Year Ended December 31, 2016 From sale of treasury stock Increase in retained earnings Net income Net loss Retained earnings Retained earnings, December 31, 2016 Retained earnings, January 1, 2016 Total Total paid-in capital Total stockholders equity T Accounts A. Enter the January 1 balances in T accounts for the stockholders equity accounts listed. Post the journal entries from part B to the eight selected accounts. 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 Journal B. Journalize the entries to record the transactions. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Retained Earnings Statement C. Prepare a retained earnings statement for the year ended December 31, 2016. Enter all amounts as positive numbers. The word Less is not required. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. Morrow Enterprises Retained Earnings Statement For the Year Ended December 31, 2016 1 2 3 4 5 Stockholders Equity D. Prepare the Stockholders Equity section of the December 31, 2016 balance sheet. Less or Deduct will automatically appear if it is required. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. Stockholders Equity 1 Paid-in capital: 2 3 4 5 6 7 8 9