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, 367,000 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 credit balance of the income summary account, $1,131,500.
	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.

T Accounts

Shaded cells have feedback.

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
		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

Points:

23 / 46

Feedback

Check My Work

The purchase of treasury stock is typically recorded using the cost method. When the company resells shares of treasury stock pay attention to the price these shares are being sold for and the price originally paid to reacquire these shares. On the date of declaration of a cash dividend, the corporation is legally obligated to pay that dividend. When the company declares a cash or stock dividend keep in mind the previous stock transactions that have occurred; would these transactions have any affect on the amount of the cash dividend?

Journal

Shaded cells have feedback.

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.

All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback.

PAGE 10

JOURNAL

Score: 62/274

	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

Points:

11.99 / 53

Feedback

Check My Work

The purchase of treasury stock is typically recorded using the cost method. When the company resells shares of treasury stock pay attention to the price these shares are being sold for and the price originally paid to reacquire these shares. On the date of declaration of a cash dividend, the corporation is legally obligated to pay that dividend. When the company declares a cash or stock dividend keep in mind the previous stock transactions that have occurred; would these transactions have any affect on the amount of the cash dividend?

Retained Earnings Statement

Shaded cells have feedback.

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.

Score: 4/47

Morrow Enterprises

Retained Earnings Statement

For the Year Ended December 31, 2016

1
2
3
4
5

Points:

0.85 / 10

Feedback

Check My Work

When preparing a retained earnings statement, recall the statement of owner's equity and the components that affected the owner's value. Remember retained earnings is a component of stockholders' equity and the stockholders are the owners of the business.

Stockholders Equity

Shaded cells have feedback.

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.

Question not attempted.

Score: 0/80

Stockholders Equity

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