Question

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 (700,000 shares authorized, 460,000 shares issued)	$4,600,000
Paid-In Capital in Excess of Stated Value-Common Stock	850,000
Retained Earnings	10,440,000
Treasury Stock (46,000 shares, at cost)	644,000

The following selected transactions occurred during the year:

Jan. 22.	Paid cash dividends of $0.12 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $49,680.
Apr. 10.	Issued 85,000 shares of common stock for $1,360,000.
June 6.	Sold all of the treasury stock for $782,000.
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 29,000 shares of treasury stock for $551,000.
Dec. 28.	Declared a $0.15-per-share dividend on common stock.
31.	Closed the credit balance of the income summary account, $10,858,000.
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.	4,600,000
		Dec. 31 Bal.

Paid-In Capital in Excess of Stated Value-Common Stock
		Jan. 1 Bal.	850,000
		Dec. 31 Bal.

Retained Earnings
		Jan. 1 Bal.	10,440,000
		Dec. 31 Bal.

Treasury Stock
Jan. 1 Bal.	644,000
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 $0.12 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $49,680.

Date	Account	Debit	Credit
Jan. 22

Apr. 10. Issued 85,000 shares of common stock for $1,360,000.

Date	Account	Debit	Credit
Apr. 10

June 6. Sold all of the treasury stock for $782,000.

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 $18 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 29,000 shares of treasury stock for $551,000.

Date	Account	Debit	Credit
Nov. 23

Dec. 28. Declared a $0.15-per-share dividend on common stock.

Date	Account	Debit	Credit
Dec. 28

Dec. 31. Closed the credit balance of the income summary account, $10,858,000.

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 $10,858,000.

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			$

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Answer 1