Question

1. Entries for Selected Corporate Transactions

   Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders' equity accounts of Morrow Enterprises Inc., with balances on January 1, 20Y5, are as follows:

   Common Stock, $10 stated value (850,000 shares authorized, 580,000 shares issued)	$5,800,000
   Paid-In Capital in Excess of Stated Value-Common Stock	1,100,000
   Retained Earnings	13,170,000
   Treasury Stock (58,000 shares, at cost)	870,000

   The following selected transactions occurred during the year:

   Jan. 22.	Paid cash dividends of $0.14 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $73,080.
   Apr. 10.	Issued 110,000 shares of common stock for $1,980,000.
   June 6.	Sold all of the treasury stock for $1,044,000.
   July 5.	Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is $20 per share.
   Aug. 15.	Issued the certificates for the dividend declared on July 5.
   Nov. 23.	Purchased 36,000 shares of treasury stock for $720,000.
   Dec. 28.	Declared a $0.17-per-share dividend on common stock.
   31.	Closed the credit balance of the income summary account, $13,697,000.
   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.

   Common Stock
   		Jan. 1 Bal.	5,800,000
   		Dec. 31 Bal.

   Paid-In Capital in Excess of Stated Value-Common Stock
   		Jan. 1 Bal.	1,100,000
   		Dec. 31 Bal.

   Retained Earnings
   		Jan. 1 Bal.	13,170,000
   		Dec. 31 Bal.

   Treasury Stock
   Jan. 1 Bal.	870,000
   Dec. 31 Bal.

   Paid-In Capital from Sale of Treasury Stock

   Stock Dividends Distributable

   Stock Dividends

   Cash Dividends

   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 dividends of $0.14 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $73,080.

   Date	Account	Debit	Credit
   Jan. 22

   Apr. 10. Issued 110,000 shares of common stock for $1,980,000.

   Date	Account	Debit	Credit
   Apr. 10

   June 6. Sold all of the treasury stock for $1,044,000.

   Date	Account	Debit	Credit
   June 6

   July 5. Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is $20 per share.

   Date	Account	Debit	Credit
   July 5

   Aug. 15. Issued the certificates for the dividend declared on July 5.

   Date	Account	Debit	Credit
   Aug. 15

   Nov. 23. Purchased 36,000 shares of treasury stock for $720,000.

   Date	Account	Debit	Credit
   Nov. 23

   Dec. 28. Declared a $0.17-per-share dividend on common stock.

   Date	Account	Debit	Credit
   Dec. 28

   Dec. 31. Closed the credit balance of the income summary account, $13,697,000.

   Date	Account	Debit	Credit
   Dec. 31

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

   Date	Account	Debit	Credit
   Dec. 31

   3. Prepare a retained earnings statement for the year ended December 31, 20Y5. Assume that Morrow Enterprises Inc. had net income for the year ended December 31, 20Y5, of $13,697,000.

   Morrow Enterprises Inc. Retained Earnings Statement For the Year Ended December 31, 20Y5
   Dividends:
   		$

   4. Prepare the Stockholders' Equity section of the December 31, 20Y5, balance sheet.

   Morrow Enterprises Inc. Stockholders' Equity As of December 31, 20Y5
   Paid-In-Capital:
   Total Paid-In Capital
   Total
   Total Stockholders' Equity			$

Answer 1