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. *
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Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Amount Descriptions
Amount Descriptions |
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Cash balance, July 31, 2016 | |
Common stock, $20 stated value; 500,000 shares authorized, 367,000 issued | |
Common stock, $20 stated value; 500,000 shares authorized, 423,140 issued | |
Common stock, $20 stated value; 500,000 shares authorized, 451,140 issued | |
Decrease in retained earnings | |
Dividends | |
Excess of issue price over stated value | |
For the Year Ended December 31, 2016 | |
From sale of treasury stock | |
Increase in retained earnings | |
Net income | |
Net loss | |
Retained earnings | |
Retained earnings, December 31, 2016 | |
Retained earnings, January 1, 2016 | |
Total | |
Total paid-in capital | |
Total stockholders’ equity |
T Accounts
A. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Post the journal entries from part B to the eight selected accounts. No post ref is required in the journal.
Common Stock | |||
Paid-In Capital in Excess of Stated Value-Common Stock | |||
Retained Earnings | |||
Treasury Stock | |||
Paid-In Capital from Sale of Treasury Stock | |||
Stock Dividends Distributable | |||
Stock Dividends | |||
Cash Dividends | |||
Journal
B. Journalize the entries to record the transactions. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
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Retained Earnings Statement
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. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.
Morrow Enterprises |
Retained Earnings Statement |
For the Year Ended December 31, 2016 |
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Stockholders’ Equity
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.
Stockholders’ Equity |
Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances...
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