Morrow Enterprises Inc. manufactures bathroom fixtures

by | Mar 18, 2020 | Uncategorized

  

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

Dec. 31 Bal.

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

Dec. 31 Bal.

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

Dec. 31 Bal.

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

Dec. 31 Bal.

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

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

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

  • Cash Dividends Dec. 28 Jan. 22
  • July 5
  • Nov. 23
  • Dec. 28
  • Dec. 31 Jan. 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 Payable Cash
  • Cash Dividends
  • Cash Dividends Payable
  • Common Stock
  • Stock Dividends Distributable
  • Cash Cash
  • Cash Dividends
  • Cash Dividends Payable
  • Common Stock
  • Stock Dividends

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

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

June 6.Sold all of the Stock that a corporation has once issued and then reacquires.treasury stock for $18 per share.

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

July 5.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 Dividends Cash
  • Common Stock
  • Paid-In Capital in Excess of Stated Value-Common Stock
  • Stock Dividends
  • Stock Dividends Distributable
  • Stock Dividends Distributable Cash
  • Common Stock
  • Paid-in Capital from Sale of Treasury Stock
  • Stock Dividends Distributable
  • Treasury Stock
  • Paid-In Capital in Excess of Stated Value-Common Stock Cash
  • 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 Distributable Cash
  • Cash Dividends Payable
  • Common Stock
  • Stock Dividends
  • Stock Dividends Distributable
  • Common Stock Cash
  • 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 Stock Cash
  • Common Stock
  • Paid-In Capital from Sale of Treasury Stock
  • Stock Dividends
  • Treasury Stock
  • Cash Cash
  • 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 Dividends Cash
  • Cash Dividends
  • Cash Dividends Payable
  • Common Stock
  • Treasury Stock
  • Cash Dividends Payable Cash
  • 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 Summary Cash
  • Common Stock
  • Income Summary
  • Paid-In Capital in Excess of Stated Value-Common Stock
  • Retained Earnings
  • Retained Earnings Cash
  • 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 Earnings Cash
  • Cash Dividends
  • Retained Earnings
  • Stock Dividends
  • Stock Dividends Distributable
  • Stock Dividends Cash
  • Common Stock
  • Retained Earnings
  • Stock Dividends
  • Stock Dividends Distributable
  • Cash Dividends Cash
  • 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, 20Y6 Cash
  • Net Income
  • Retained Earnings, December 31, 20Y6
  • Retained Earnings, January 1, 20Y6
  • Net Income Decrease in Retained Earnings
  • Net Income
  • Retained Earnings, January 1, 20Y6
  • Retained Earnings, December 31, 20Y6
  • Cash Dividends Cash
  • Cash Dividends
  • Retained Earnings, January 1, 20Y6
  • Stock Dividends Cash
  • Retained Earnings, January 1, 20Y6
  • Stock Dividends Distributable
  • Stock Dividends
  • Change in retained earnings Change in retained earnings
  • Retained Earnings, January 1, 20Y6
  • Retained Earnings, December 31, 20Y6
  • Stock Dividends
  • Retained Earnings, December 31, 20Y6 Change 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’ Equity Paid-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 value Cash
  • Excess of issue price over stated value
  • Retained Earnings
  • Treasury Stock (19,000 shares, at cost)
  • From Sale of Treasury Stock Cash
  • From Sale of Treasury Stock
  • Retained Earnings
  • Treasury Stock (19,000 shares, at cost)
  • Total Paid-In Capital Retained Earnings Excess of Stated Value-Common Stock
  • From Sale of Treasury Stock
  • Retained Earnings
  • Treasury Stock (19,000 shares, at cost)
  • Total Treasury 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)

Total Stockholders’ Equity Feedback

  

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