Question

Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2016, are as follows: Common stock, $20 stated value; 500,000 shares authorized, 367,000 issued $7,340,000 Paid-In Capital in Excess of Stated Value—Common Stock 844,100 Retained Earnings 33,388,000 Treasury Stock (22,800 shares, at cost) 387,600 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 $30,978. Apr. 10 Issued 71,000 shares of common stock for $23 per share. Jun. 6 Sold all of the treasury stock for $27 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 28,000 shares of treasury stock for $18 per share. Dec. 28 Declared a $0.09-per-share dividend on common stock. 31 Closed the credit balance of the income summary account, $1,131,500. 31 Closed the two dividends accounts to Retained Earnings. Required: A. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. B. Journalize the entries to record the transactions, and post to the eight selected accounts. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles. C. Prepare a retained earnings statement for the year ended December 31, 2016. Enter all amounts as positive numbers. The word “Less” is not required.* D. Prepare the Stockholders’ Equity section of the December 31, 2016, balance sheet. “Less” or “Deduct” will automatically appear if it is required. * * Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Answer 1

28-Dec	Cash Dividend (.09*451140)	40603
	Cash Dividend Payable		40603
31-Dec	Income summary	1131500
	Retained Earnings		1131500
	Retained Earnings	382243
	Stock Dividend		341640
	Cash Dividend		40603

ans c	Statement of Retained Earnings
	Beginning Balance, Jan 1		33388000
	Add: net Income		1131500
			34519500
	Less: Stock Dividend	341640
	Cash Dividend	40603	382243
	Ending balance, Dec 31		34137257
ans d	Stockholder Equity Section
	Common stock	9022800
	Paid in capital in excess of par-common stock	1135940
	Paid in capital in excess Treasury stock	228000
	Total paid in capital	10386740
	Retained Earnings	34137257
	Stockholder equity, Dec 31	44523997