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, 352,000 issued	$7,040,000
Paid-In Capital in Excess of Stated ValueCommon Stock	774,400
Retained Earnings	32,153,000
Treasury Stock (25,200 shares, at cost)	478,800

The following selected transactions occurred during the year:

Jan.	22	Paid cash dividends of $0.05 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $16,340.
Apr.	10	Issued 73,000 shares of common stock for $25 per share.
Jun.	6	Sold all of the treasury stock for $27 per share.
Jul.	5	Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is $25 per share.
Aug.	15	Issued the certificates for the dividend declared on July 5.
Nov.	23	Purchased 25,000 shares of treasury stock for $18 per share.
Dec.	28	Declared a $0.08-per-share dividend on common stock.
	31	Closed the credit balance of the income summary account, $1,223,000.
	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, 352,000 issued
Common stock, $20 stated value; 500,000 shares authorized, 421,250 issued
Common stock, $20 stated value; 500,000 shares authorized, 446,250 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
		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

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
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5
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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

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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:
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