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