Problem 13-58 Accounting for Stock Transactions Equity Financing: Problems LO2, LO3, LO9, LO11 Morris Corporation is publicly owned, and its shares are traded on a national stock exchange. Morris has 16,000 shares of $2 stated value common stock authorized. Only 75% of these shares have been issued, and of the shares issued, only 11,000 are outstanding. On December 31, 2012, the Stockholders' Equity section revealed that the balance in Paid-In Capital in Excess of Stated Value was $416,000, and the Retained Earnings balance was $110,000. Treasury stock was purchased at an average cost of $37.50 per share. During 2013, Morris had the following transactions: Jan. 15 Morris issued, at $55 per share, 800 shares of $50 par, 5% cumulative preferred stock; 2,000 shares are authorized. Feb. 1 Morris sold 1,500 shares of newly issued $2 stated value common stock at $42 per share. Mar. 15 Morris declared a cash dividend on common stock of $0.15 per share, payable on April 30 to all stockholders of record on April 1. Apr. 15 Morris reacquired 200 shares of its common stock for $43 per share. Morris uses the cost method to account for treasury stock. 30 Morris paid dividends. 30 Employees exercised 1,000 options granted in 2008 under a fixed stock option plan. When the options were granted, each option entitled the employee to purchase one share of common stock for $50 per share. The share price on the grant date was $51 per share. On April 30, when the market price was $55 per share, Morris issued new shares to the employees. The fair value of the options at the grant date was $6. May 1 Morris declared a 10% stock dividend to be distributed on June 1 to stockholders of record on May 7. The market price of the common stock was $55 per share on May 1 (before the stock dividend). (Assume that treasury shares do not participate in stock dividends.) 31 Morris sold 150 treasury shares reacquired on April 15 and an additional 200 shares costing $7,500 that had been on hand since the beginning of the year. The selling price was $57 per share. June 1 Morris distributed the stock dividend. Sept. 15 The semiannual cash dividend on common stock was declared, amounting to $0.15 per share. Morris also declared the yearly dividend on preferred stock. Both are payable on October 15 to stockholders of record on October 1. Oct. 15 Morris paid dividends. Net income for 2013 was $50,000. Assume that revenues and expenses were closed to a temporary account, Income Summary. Use this account to complete the closing process. Instructions: Compute the number of shares and dollar amount of treasury stock at the beginning of 2013. Make the necessary journal entries to record the transactions in 2013 relating to stockholders' equity. Prepare the Stockholders' Equity section of Morris Corporation's December 31, 2013, balance sheet.

13-58 Name: DOUGLAS JIMENEZ Enter the appropriate amounts/formulas in the blue-shaded cells, or select from the drop-down lists. The word \"Wrong\" will appear to the left of incorrect entries. 1. Number of shares and dollar amount of treasury stock at the beginning of 2013: Authorized shares Issued shares as a % of authorized shares Issued shares Less: Outstanding shares Treasury shares Average purchase price per share of treasury stock Total dollar amount of treasury stock 16,000 75% 12,000 11,000 1,000 $37.50 $37,500 General Journal 2. Date Jan. 15 Account Title Debit Cash Credit 44,000 Preferred Stock Paid-in Capital in Excess of Par - Preferred Feb. 1 40,000 4,000 Cash 63,000 Common Stock Paid-in Capital in Excess of Stated Value - Common 3,000 60,000 Mar. 15 Dividends (Retained Earnings) Dividends Payable 1,875 Apr. 15 Treasury Stock Cash 8,600 30 Dividends Payable Cash 1,875 30 Cash Paid-in Capital from Stock Options - Common Stock Common Stock Paid-in Capital in Excess of Stated Value - Common 50,000 6,000 Dividends (Retained Earnings) Stock Dividends Distributable Paid-in Capital in Excess of Stated Value - Common 66,500 Cash 19,950 May 1 31 1,875 8,600 1,875 2,000 54,000 2,660 63,840 Treasury Stock Paid-In Capital from Treasury Stock 13,950 6,000 June 1 Stock Dividends Distributable Common Stock 2,660 Sept. 15 Dividends (Retained Earnings) Dividends Payable - Preferred Dividends Payable - Common 4,247 Oct. 15 Dividends Payable - Preferred Dividends Payable - Common Cash 2,000 2,247 Dec. 31 Income Summary Retained Earnings 31 3. 2,660 2,000 2,247 4,247 Retained Earnings Dividends (Retained Earnings) Stockholders' Equity Contributed capital: 5% preferred stock, $50 par, cumulative, 2,000 shares authorized, 800 shares outstanding Paid-in capital in excess of par - preferred stock Common stock, $2 stated value, 16,000 shares authorized, 15,830 issued, 14,980 outstanding Paid-in capital in excess of stated value - common stock Paid in capital from treasury stock Total contributed capital Retained earnings Total contributed capital and retained earnings Less: Treasury stock at cost (850 shares) Total stockholders' equity $40,000 4,000 31,660 593,840 6,000 $675,500 Wrong (31,875)