Morrow Enterprises Inc. manufactures bathroom fixtures. Thestockholders equityaccounts of Morrow Enterprises Inc., with balances on January 1, 2016, are as follows:

CommonStock,$20statedvalue(500,000sharesauthorized,375,000sharesissued) $7,500,000

Paid-In Capital in Excess of Stated ValueCommon Stock 825,000

Retained Earnings 33,600,000

Treasury Stock (25,000 shares, at cost) 450,000

The following selected transactions occurred during the year:

Jan.22 Paid cashdividendsof $0.08 per share on thecommon stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $28,000

Apr.10 Issued 75,000 shares of common stock for $24 per share.

Jun.6 Sold all of the treasury stock for $26 per share.

Jul.5 Declared a 4%stockdividend 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 30,000 shares of treasury stock for $19 per share.

Dec.28 Declared a $0.10-per-share dividend on common stock.

31 Closed the credit balance of the income summary account, $1,125,000.

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 aretained earnings statementfor 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

Morrow Enterprises Inc.General Ledger

ASSETS

110Cash

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

X

Amount Descriptions

Cash balance, July 31, 2016

Common stock, $20 stated value; 500,000 shares authorized, 375,000 issued

Common stock, $20 stated value; 500,000 shares authorized, 438,000 issued

Common stock, $20 stated value; 500,000 shares authorized, 468,000 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