Question: .Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises' stockholders' equity accounts, with balances on January 1, 20Y6, are as follows:

Common Stock, $10 stated value (450,000 shares authorized, 300,000 shares issued)$3,000,000Paid-In Capital in Excess of Stated Value-Common Stock550,000Retained Earnings6,810,000Treasury Stock (30,000 shares, at cost)450,000The following selected transactions occurred during the year:

Jan. 22.Paid A cash distribution of earnings by a corporation to its shareholders.cash dividends of $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $40,500.Apr. 10.Issued 55,000 shares of common stock for $880,000.June 6.Sold all of the treasury stock for $18 per share.July 5.Declared a 5% A distribution of shares of stock to a corporation's shareholders.Stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.Aug. 15.Issued shares of stock for the stock dividend declared on July 5.Nov. 23.Purchased 19,000 shares of treasury stock for $20 per share.Dec. 28.Declared a $0.18-per-share dividend on common stock.31.Closed the credit balance of the income summary account, $7,082,000.31.Closed the two dividends accounts to Retained Earnings.Required:

1.The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate. If required, round to one decimal place.

• Common StockJan. 1 Bal.3,000,000Apr. 10Apr. 10
• June 6
• July 5
• Dec. 27
• Aug. 15July 5
• Aug. 15
• Jan. 22
• Dec. 28

Dec. 31 Bal.

• Paid-In Capital in Excess of Stated Value-Common StockJan. 1 Bal.550,000Apr. 10Apr. 10
• June 6
• July 5
• Dec. 28
• July 5June 6
• July 5
• Aug. 15
• Dec. 28

Dec. 31 Bal.

• Retained Earnings Dec. 31Apr. 10
• June 6
• July 5
• Dec. 31
• Jan. 1 Bal.6,810,000Dec. 31Jan. 22
• June 6
• Nov. 23
• Dec. 31

Dec. 31 Bal.

• Treasury Stock Jan. 1 Bal.450,000June 6Apr. 10
• June 6
• July 5
• Dec. 31
• Nov. 23Jan. 22
• June 6
• Nov. 23
• Dec. 31

Dec. 31 Bal.

• Paid-In Capital from Sale of Treasury StockJune 6Jan. 22
• June 6
• Nov. 23
• Dec. 28

• Stock Dividends Distributable Aug. 15Jan. 22
• Aug. 15
• Nov. 23
• Dec. 31
• July 5Jan. 22
• July 5
• Nov. 23
• Dec. 31

• Stock Dividends July 5Jan. 22
• July 5
• Nov. 23
• Dec. 31
• Dec. 31Jan. 22
• July 5
• Nov. 23
• Dec. 31

• Cash Dividends Dec. 28Jan. 22
• July 5
• Nov. 23
• Dec. 28
• Dec. 31Jan. 22
• July 5
• Nov. 23
• Dec. 31

2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.

Jan. 22.Paid cash Distributions of a corporation's earnings to stockholders.dividends of $0.15 per share on the The stock outstanding when a corporation has issued only one class of stock.common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $40,500.

• DateAccountDebitCreditJan. 22Cash Dividends PayableCash
• Cash Dividends
• Cash Dividends Payable
• Common Stock
• Stock Dividends Distributable
• CashCash
• Cash Dividends
• Cash Dividends Payable
• Common Stock
• Stock Dividends

Apr.10.Issued 55,000 shares of common stock for $880,000.

• DateAccountDebitCreditApr. 10CashCash
• Common Stock
• Paid-In Capital from Sale of Treasury Stock
• Paid-In Capital in Excess of Stated Value-Common Stock
• Treasury Stock
• Common StockCash
• Cash Dividends
• Common Stock
• Stock Dividends
• Treasury Stock
• Paid-In Capital in Excess of Stated Value-Common StockCash
• Cash Dividends Payable
• Paid-In Capital from Sale of Treasury Stock
• Paid-In Capital in Excess of Stated Value-Common Stock
• Preferred Stock

June6.Sold all of the Stock that a corporation has once issued and then reacquires.treasury stock for $18 per share.

• DateAccountDebitCreditJune 6CashCash
• Common Stock
• Paid-In Capital in Excess of Stated Value-Common Stock
• Retained Earnings
• Treasury Stock
• Treasury StockCash
• Common Stock
• Paid-In Capital in Excess of Stated Value-Common Stock
• Retained Earnings
• Treasury Stock
• Paid-In Capital from Sale of Treasury StockCommon Stock
• Paid-In Capital from Sale of Treasury Stock
• Preferred Stock
• Retained Earnings
• Stock Dividends Distributable

July5.Declared a 5% Shares of ownership of a corporation.stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.

• DateAccountDebitCreditJuly 5Stock DividendsCash
• Common Stock
• Paid-In Capital in Excess of Stated Value-Common Stock
• Stock Dividends
• Stock Dividends Distributable
• Stock Dividends DistributableCash
• Common Stock
• Paid-in Capital from Sale of Treasury Stock
• Stock Dividends Distributable
• Treasury Stock
• Paid-In Capital in Excess of Stated Value-Common StockCash
• Cash Dividends
• Paid-In Capital in Excess of Stated Value-Common Stock
• Stock Dividends
• Treasury Stock

Aug.15.Issued shares of stock for the dividend declared on July 5.

• DateAccountDebitCreditAug. 15Stock Dividends DistributableCash
• Cash Dividends Payable
• Common Stock
• Stock Dividends
• Stock Dividends Distributable
• Common StockCash
• Cash Dividends Payable
• Common Stock
• Stock Dividends
• Stock Dividends Distributable

Nov.23.Purchased 19,000 shares of treasury stock for $20 per share.

• DateAccountDebitCreditNov. 23Treasury StockCash
• Common Stock
• Paid-In Capital from Sale of Treasury Stock
• Stock Dividends
• Treasury Stock
• CashCash
• Common Stock
• Paid-In Capital from Sale of Treasury Stock
• Stock Dividends Distributable
• Treasury Stock

Dec.28.Declared a $0.18-per-share dividend on common stock.

• DateAccountDebitCreditDec. 28Cash DividendsCash
• Cash Dividends
• Cash Dividends Payable
• Common Stock
• Treasury Stock
• Cash Dividends PayableCash
• Cash Dividends Payable
• Common Stock
• Stock Dividends
• Stock Dividends Distributable

Dec.31.Closed the credit balance of the income summary account, $7,082,000.

• DateAccountDebitCreditDec. 31Income SummaryCash
• Common Stock
• Income Summary
• Paid-In Capital in Excess of Stated Value-Common Stock
• Retained Earnings
• Retained EarningsCash
• Common Stock
• Income Summary
• Paid-In Capital in Excess of Stated Value-Common Stock
• Retained Earnings

Dec.31.Closed the two dividends accounts to Retained Earnings.

• DateAccountDebitCreditDec. 31Retained EarningsCash
• Cash Dividends
• Retained Earnings
• Stock Dividends
• Stock Dividends Distributable
• Stock DividendsCash
• Common Stock
• Retained Earnings
• Stock Dividends
• Stock Dividends Distributable
• Cash DividendsCash
• Cash Dividends
• Income Summary
• Retained Earnings
• Treasury Stock

3.A summary of the changes in the retained earnings in a corporation for a specific period of time, such as a month or a year.retained earnings statement for the year ended December 31, 20Y6.

Morrow Enterprises Inc.

Retained Earnings Statement

• For the Year Ended December 31, 20Y6Retained Earnings, January 1, 20Y6Cash
• Net Income
• Retained Earnings, December 31, 20Y6
• Retained Earnings, January 1, 20Y6
• Net IncomeDecrease in Retained Earnings
• Net Income
• Retained Earnings, January 1, 20Y6
• Retained Earnings, December 31, 20Y6
• Cash DividendsCash
• Cash Dividends
• Retained Earnings, January 1, 20Y6
• Stock DividendsCash
• Retained Earnings, January 1, 20Y6
• Stock Dividends Distributable
• Stock Dividends
• Change in retained earningsChange in retained earnings
• Retained Earnings, January 1, 20Y6
• Retained Earnings, December 31, 20Y6
• Stock Dividends
• Retained Earnings, December 31, 20Y6Change in retained earnings
• Retained Earnings, January 1, 20Y6
• Retained Earnings, December 31, 20Y6
• Stock Dividends

4.Prepare the Stockholders' Equity section of the December 31, 20Y6, balance sheet.

Morrow Enterprises Inc.

Balance Sheet

• December 31, 20Y6Stockholders' EquityPaid-In-Capital:Common Stock, $10 stated value (450,000 shares authorized, 372,750 shares issued)Cash
• Common Stock, $10 stated value (450,000 shares authorized, 372,750 shares issued)
• Retained Earnings
• Treasury Stock (19,000 shares, at cost)
• Excess of issue price over stated valueCash
• Excess of issue price over stated value
• Retained Earnings
• Treasury Stock (19,000 shares, at cost)
• From Sale of Treasury StockCash
• From Sale of Treasury Stock
• Retained Earnings
• Treasury Stock (19,000 shares, at cost)
• Total Paid-In CapitalRetained EarningsExcess of Stated Value-Common Stock
• From Sale of Treasury Stock
• Retained Earnings
• Treasury Stock (19,000 shares, at cost)
• TotalTreasury Stock (19,000 shares, at cost)Paid-in-Capital in Excess of Stated Value-Common Stock
• Cash
• Retained Earnings
• Treasury Stock (19,000 shares, at cost)

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