Question

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

Common stock, $20 stated value (500,000 shares authorized, 363,000 shares issued)	$7,260,000
Paid-In Capital in Excess of Stated Value—Common Stock	834,900
Retained Earnings	32,541,000
Treasury Stock (25,900 shares, at cost)	492,100

The following selected transactions occurred during the year:

Jan.	22	Paid cash dividends of $0.09 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $30,339.
Apr.	10	Issued 80,000 shares of common stock for $23 per share.
Jun.	6	Sold all of the treasury stock for $25 per share.
Jul.	5	Declared a 3% Stock dividend on common stock, to be capitalized at the market price of the stock, which is $26 per share.
Aug.	15	Issued the certificates for the dividend declared on July 5.
Nov.	23	Purchased 33,000 shares of treasury stock for $19 per share.
Dec.	28	Declared a $0.10-per-share dividend on common stock.
	31	Closed the two dividends accounts to Retained Earnings.

	Required:
1.	Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. If required, round your answers to the nearest dollar.
2.	Journalize the entries to record the transactions, and post to the eight selected accounts. Assume that the closing entry for revenues and expenses has been made and post net income of $1,218,500 to the retained earnings account. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar.
3.	Prepare a statement of stockholders’ equity for the year ended December 31, 20Y6. Assume that net income was $1,218,500 for the year ended December 31, 20Y6. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is an amount is zero, enter "0".*
4.	Prepare the “Stockholders’ Equity” section of the December 31, 20Y6, balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign.* * Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Chart of Accounts

CHART OF ACCOUNTS
Morrow Enterprises Inc.
General Ledger
ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 236 Stock dividends Distributable 311 Common Stock 313 Paid-In Capital in Excess of Stated Value-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock dividends	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 515 Credit Card Expense 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Selling Expenses 534 Rent Expense 535 Insurance Expense 536 Office Supplies Expense 537 Organizational Expenses 562 Depreciation Expense-Equipment 590 Miscellaneous Expense 710 Interest Expense

Amount Descriptions

Amount Descriptions
Balances, January 1
Balances, December 31
Cash dividends
Common stock, $20 stated value (500,000 shares authorized, 456,290 shares issued)
Excess of issue price over stated value
From sale of treasury stock
Issued common stock
Net income
Net loss
Purchase of treasury stock
Sale of treasury stock
Stock dividends
Retained Earnings
Total
Total paid-in capital
Total stockholders’ equity
Treasury stock (33,000 shares at cost)

T Accounts

1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Post the journal entries from part 2 to the eight selected accounts. If required, round your answers to the nearest dollar.

Common Stock
		Jan. 1 Bal.
		Apr. 10
		Aug. 15
		Dec. 31 Bal.

Paid-In Capital in Excess of Stated Value-Common Stock
		Jan. 1 Bal.
		Apr. 10
		Jul. 5
		Dec. 31 Bal.

Retained Earnings
Dec. 31		Jan. 1 Bal.
		Dec. 31
		Dec. 31 Bal.

Treasury Stock
Jan. 1 Bal.		Jun. 6
Nov. 23
Dec. 31 Bal.

Paid-In Capital from Sale of Treasury Stock
		Jun. 6

Stock dividends Distributable
Aug. 15		Jul. 5

Stock dividends
Jul. 5		Dec. 31

Cash Dividends
Dec. 28		Dec. 31

Statement of Stockholders’ Equity

3. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y6. Assume that net income was $1,218,500 for the year ended December 31, 20Y6. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is an amount is zero, enter "0". Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Morrow Enterprises Inc.

Statement of Stockholders’ Equity

For the Year Ended December 31, 20Y6

1		Common Stock	Paid-In Capital in Excess of Stated Value	Paid-In Capital from Sale of Treasury Stock	Retained Earnings	Treasury Stock	Total
2
3
4
5
6
7
8
9

Stockholders’ Equity

4. Prepare the “Stockholders’ Equity” section of the December 31, 20Y6 balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Morrow Enterprises Inc.

Balance Sheet

December 31, 20Y6

1	Stockholders' Equity
2	Paid-in capital:
3
4
5
6
7
8
9
10

Answer 1

Answer to Question 2:

Answer to Question 2:

Working for Question 2:

Answer to Question 1 and 2:

Answer to Question 1 and 2:

Answer to Question 1 and 2:

Answer to Question 3:

Answer to Question 4: