Question

Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises' stockholders' equity accounts, with balances on January 1, 2016, are as follows: $7,380,000 848,700 Common stock, $20 stated value (500,000 shares authorized, 369,000 shares issued) Paid-In Capital in Excess of Stated Value - Common Stock Retained Earnings Treasury Stock (23,300 shares, at cost) 33,497,000 419,400 The following selected transactions occurred during the year: Jan. 22 Paid cash dividends of $0.08 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $27,656. Apr. Jun. 10 6 5 Issued 72,000 shares of common stock for $24 per share. Sold all of the treasury stock for $26 per share. Declared a 2% Stock dividend on common stock, to be capitalized at the market price of the stock, Jul. which is $26 per share. Aug. 15 23 Issued the certificates for the dividend declared on July 5. Purchased 30,000 shares of treasury stock for $20 per share. Nov. Dec. Declared a $0.12-per-share dividend on common stock. 28 31 Closed the two dividends accounts to Retained Earnings.

Answer 1

Credit Calculation Morrow Enterprises Date Account 22-Jan Dividends Payable Cash Debit 27,656 27,656 1,728,000 10-Apr Cash Common Stock Paid in Capital in Excess of Stated Value-Common Stock 1,440,000 288,000 =72,000*24 =72,000*20 605,800 =23,300*26 6-Jun Cash Treasury Stock Paid in Capital from Treasury Stock 419,400 186,400 229,320 5-Jul Stock Dividends Stock Dividends Distributable Paid in Capital in Excess of Stated Value-Common Stock =8,820*26 176,400 =8,820*20 52,920 176,400 15-Aug Stock Dividends Distributable Common Stock 176,400 600,000 =30,000*20 23-Nov Treasury Stock Cash 600,000 50,378 As per below wkgs 28-Dec Cash Dividends Dividends Payable 50,378 1,090,000 31-Dec Income Summary Retained Earnings 1,090,000 279,698 31-Dec Retained Earnings Stock Dividends Cash Dividends 229,320 50,378 Workings Cash Dividends Opening Shares Shares Issued Subtotal 2% Stock Dividends Number of Common Shares Issued Treasury Stock Number of Common Shares 0/s Cash Dividend per share Cash Dividends -441,000*2% 369,000 72,000 441,000 8,820 449,820 (30,000) 419,820 0.12 50,378 =419,820*0.12

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 848,700 10-Apr 288,000 5-Jul 52,920 Debit Date Credit Date Retained Earnings 229,320 Op bal 33,497,000 Op bal 50,378 31-Dec 1,090,000 23-Nov Debit Date Treasury Stock 419,400 6-Jun 600,000 7,380,000 1,440,000 176,400 419,400 31-Dec 31-Dec 34,307,302 Bal. Bal. 8,996,400 Paid in Capital from Treasury Stock 6-Jun 186,400 Bal. 1,189,620 Stock Dividends Distributable 15-Aug 176,400 5-Jul 176,400 Bal. Stock Dividends 229,320 31-Dec 600,000 Cash Dividends 50,378 31-Dec 5-Jul 229,320 28-Dec 50,378 Bal. 186,400 Bal. Bal. Bal.

Morrow Enterprises Statement of Stockholders Equity For the year ended December 31, 2016 Paid in Capital in Excess Paid in Capital from Common Stock of Stated Value-CS Treasury Stock 7,380,000 848,700 1,440,000 288,000 186,400 Beginning balance Issue of new shares Sale of Treasury stock Purchase of Treasury stock Net Income Stock Dividends Cash Dividends Ending Balance Retained Earnings Treasury Stock Total Equity 33,497,000 (419,400) 41,306,300 1,728,000 419,400 605,800 (600,000) (600,000) 1,090,000 1,090,000 (229,320) (50,378) (50,378) 34,307,302 (600,000) 44,079,722 176,400 52,920 8,996,400 1,189,620 186,400

Morrow Enterprises Balance Sheet As of December 31, 2016 Stockholders Equity Paid in Capital Common Stock - $20 stated value (500,000 shares authorized, 449,820 shares issued & 419,820 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 (30,000 shares @ $20 per share) Total Stockholders Equity 8,996,400 1,189,620 186,400 10,372,420 34,307,302 44,679,722 (600,000) 44,079,722