Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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,

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, 383,000 issued

$7,660,000

Paid-In Capital in Excess of Stated ValueCommon Stock

957,500

Retained Earnings

35,012,000

Treasury Stock (25,700 shares, at cost)

462,600

The following selected transactions occurred during the year:

Jan.

22

Paid cash dividends of $0.06 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $21,438.

Apr.

10

Issued 77,000 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 33,000 shares of treasury stock for $20 per share.

Dec.

28

Declared a $0.08-per-share dividend on common stock.

31

Closed the credit balance of the income summary account, $1,196,500.

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.

Amount Descriptions

Cash balance, July 31, 2016

Common stock, $20 stated value; 500,000 shares authorized, 383,000 issued

Common stock, $20 stated value; 500,000 shares authorized, 440,800 issued

Common stock, $20 stated value; 500,000 shares authorized, 473,800 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

image text in transcribed

ASSETS REVENUE 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 D 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 582 Depreciation Expen 590 Miscellaneous Expense 710 Interest Expense quipment 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Investments

Authors: Barbara Davison

1st Edition

0894134272, 978-0894134272

More Books

Students also viewed these Accounting questions

Question

What is CRM?

Answered: 1 week ago

Question

Explain the importance of Human Resource Management

Answered: 1 week ago

Question

Discuss the scope of Human Resource Management

Answered: 1 week ago

Question

Discuss the different types of leadership

Answered: 1 week ago

Question

Write a note on Organisation manuals

Answered: 1 week ago