Question

Entries for selected corporate Transactions:

Morrow enterprise inc. manufactures bathroom fixtures. The stockholders's equity accounts of morrow enterprise inc with balances on January 1, are as follows:

Common stock, $10 stated value (800,000 shares authorized, 520,000 shares issued) $5,200,000

Paid-in capital in excess of stated value-common stock 1,000,000

Retained earnings 11,800,000

Treasury stock (52000 shares at cost) 780,000

The following selected transactions occurred during the year:

Jan. 22. Paid 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 $70,200. Apr. 10. Issued 100,000 shares of common stock for $1,600,000.

June 6. Sold all of the treasury stock for $936,000.

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

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

Nov. 23. Purchased 33,000 shares of treasury stock for $660,000.

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

Dec. 31. Closed the credit balance of the income summary account, $12,272,000.

Dec. 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.

Answer 1

Required: 1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts.

Common Stock Account
			Jan-01	Bal	5200000
			Apr-10	Issued	1600000
			Aug-15	Issued	310000	*
			Dec-31	Balance	7110000
Aug-15
	520000 shares+100000 shares = 620000 shares
	620000 shares *5% = 31000*10 = 310,000	*

b) Record the above transactions in the T accounts and provide the December 31 balance where appropriate.

Paid in Capital in excess of Stated value - Common stock
				Jan-01	Balance	1000000
				Apr-10		600000
				(100000*6)
				Jul-05		248000
				(31000*8)
				Dec-31	Balance	1848000

Retained Earnings
	Cash Div	70200		Jan-01	Balance	11800000
	Stock Div	558000		Dec-31	Revenue	12272000
		628200
					Total	24072000
	Bal	23443800

Stockholders Equity - Dec 31,
Paid in Capital
Common Stock $10 stated value (800,000 shares authorized,
711,000 shares issued)							7110000
Excess issue price over the stated value							1848000
Sale of treasury stock							156000
52,000 shares *3
Total Paid in Capital							9114000
Retained Earnings							23443800
Total							32557800
Less - Treasury Stock							660000
Total Stockholders Equity							31897800