Question

Ch 13 HWB Comprehensive Prob 75 pts Entries for Selected Corporate Transactions Morrow Enterprises Inc, manufactures bathroom fixtures. The stockholders' equity accounts of Morrow Enterprises Inc., with balances on January 1, 2045, are as follows: 0.000 Common Stock, $10 stated value (350,000 shares authorized, 240,000 shares issued) Paid-In Capital in Excess of Stated Value-Common Stock 50,000 > Retained Earnings 5.450.000 Treasury Stock (24,000 shares, at cost) 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 $30,240. Apr 10. Issued 45,000 shares of common stock for $720,000. June 6. Sold all of the treasury stock for $432,000. Declared a 4% 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 15,000 shares of treasury stock for $300,000. Dec. 21. Declared a $0.17-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $5,668,000. 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 720.000

Answer 1

Credit Calculation Morrow Enterprises Date Account 22-Jan Dividends Payable Cash Debit 30,240 30,240 720,000 10-Apr Cash Common Stock Paid in Capital in Excess of Stated Value-Common Stock -45,000*10 450,000 270,000 432,000 6-Jun Cash Treasury Stock Paid in Capital from Treasury Stock 360,000 72,000 205,200 5-Jul Stock Dividends Stock Dividends Distributable Paid in Capital in Excess of Stated Value-Common Stock =11,400*18 =11,400*10 114,000 91,200 114,000 15-Aug Stock Dividends Distributable Common Stock 114,000 300,000 23-Nov Treasury Stock Cash 300,000 47,838 As per below wkgs 28-Dec Cash Dividends Dividends Payable 47,838 5,668,000 31-Dec Income Summary Retained Earnings 5,668,000 253,038 31-Dec Retained Earnings Stock Dividends Cash Dividends 205,200 47,838 Workings Cash Dividends Opening Shares Shares Issued Subtotal 4% Stock Dividends Number of Common Shares Issued Treasury Stock Number of Common Shares o/s Cash Dividend per share Cash Dividends =285,000*4% 240,000 45,000 285,000 11,400 296,400 (15,000) 281,400 0.17 47,838 =281,400*0.17

Credit Date Credit Date Credit Morrow Enterprises T Accounts Date Debit Date Common Stock Op bal 10-Apr 15-Aug Date Debit Date Credit Paid in Capital in Excess of Stated Value-CS Op bal 450,000 10-Apr 270,000 5-Jul 91,200 Debit Date Retained Earnings 205,200 Op bal 47,838 31-Dec Debit Date Treasury Stock 360,000 6-Jun 300,000 2,400,000 450,000 114,000 360,000 31-Dec 31-Dec 5,450,000 5,668,000 Op bal 23-Nov Bal. 10,864,962 Bal. 2,964,000 Paid in Capital from Treasury Stock 6-Jun 72,000 Bal. 811,200 Stock Dividends Distributable 15-Aug 114,000 5-Jul 114,000 Bal. Stock Dividends 205,200 31-Dec 300,000 Cash Dividends 47,838 31-Dec 5-Jul 205,200 28-Dec 47,838 Bal. 72,000 Bal. Bal. .. Bal. .

5,450,000 Morrow Enterprises Statement of Retained Earnings For the year ended December 31, 2015 Retained Earnings, Jan 1, 2015 Net income Dividends Cash Dividends Stock Dividends Changes in retained earnings Retained Earnings, Dec 31, 2045 5,668,000 (47,838) (205,200) 5,414,962 10,864,962

Morrow Enterprises Balance Sheet As of December 31, 2045 Stockholders Equity Paid in Capital Common Stock - $10 stated value (350,000 shares authorized, 296,400 shares issued & 281,400 shares outstanding) Paid in Capital in Excess of Stated Value-Common Stock Paid in Capital from Treasury Stock Total Paid in Capital Retained Earnings Total Less: Treasury Stock (15,000 shares @ $20 per share) Total Stockholders Equity 2,964,000 811,200 72,000 3,847,200 10,864,962 14,712,162 (300,000) 14,412,162