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, 2045, are as fol $5,600,000 Common Stock, $10 stated value (850,000 shares authorized, 560,000 shares issued) Paid-In Capital in Excess of Stated Value-Common Stock 1,050,000 12,710,000 Retained Earnings 840,000 Treasury Stock (56,000 shares, at cost) The following selected transactions occurred during the year: o 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 $70,560. Apr. 10. Issued 105,000 shares of common stock for $1,890,000. June 6. Sold all of the treasury stock for $1,008,000. July 5. Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is $20 per share. Aug. 15. Issued the certificates for the dividend declared on July 5. Nov. 23. Purchased 35,000 shares of treasury stock for $700,000. Dec. 28. Declared a $0.17-per-share dividend on common stock 31. Closed the credit balance of the income summary account, $13,218,000. 31. Closed the two dividends accounts to Retained Earnings.

Answer 1

		Common stock
Particulars		Debit	Particulars		Credit
			Jan 1. Bal.		5600000
			Apr 10. Cash		1050000
			Aug 15.stock dividend distributable		332500
Dec 31. Balance		6982500
		6982500			6982500
Paid-In Capital in Excess of Stated Value-Common Stock
Particulars		Debit	Particulars		Credit
			Jan 1. Bal.		1050000
			Apr 10. Cash		840000
Dec 31. Balance		2222500	July 5. Stock dividend		332500
		2222500			2222500
		Retained earnings
Particulars		Debit	Particulars		Credit
Dec 31. Stock dividends		665000	Jan 1. Bal.		12710000
Dec 31. cash dividends		112753	Dec 31.Income summary		13218000
Dec 31.Bal.		25150247
		25928000			25928000
		Treasury stock
Particulars		Debit	Particulars		Credit
Jan 1. Bal.		840000	June 6. Cash		840000
Nov 23.cash		700000	Dec 31.Bal.		700000
		1540000			1540000
	Paid-In Capital from Sale of Treasury Stock
Particulars		Debit	Particulars		Credit
Dec 31.Bal.		168000	June 6. Cash		168000
		168000			168000
		Stock Dividends Distributable
Particulars		Debit	Particulars		Credit
Aug 15.Common stock		332500	July 5. Stock dividend		332500
		332500			332500
		Stock Dividends
Particulars		Debit	Particulars		Credit
July 5.Stock dividends distributable		332500
July 5.Paid-In Capital in Excess of Stated Value-Common Stock		332500	Dec 31. Retained earnings		665000
		665000			665000
		Cash Dividends
Particulars		Debit	Particulars		Credit
Dec 28. cash dividend payable		112753	Dec 31. Retained earnings		112753
		112753			112753

E Debit Credit 70560 70560 1890000 1050000 840000 (Plug) 1008000 840000 (Plug) 168000 Date Account Jan 22. Cash dividend payable Cash (Paid cash dividends) Apr 10. Cash Common stock (105000*10) Paid-In Capital in Excess of Stated Value-Common Stock (Issued 105,000 shares) June 6. Cash Treasury stock Paid-In Capital from Sale of Treasury Stock (Sold all of the treasury stock) July 5. Stock dividends Stock dividends distributable Paid-In Capital in Excess of Stated Value-Common Stock (Declared a 4% Stock dividend on common stock) Aug 15. Stock dividends distributable Common stock (Issued shares of stock for the dividend declared on July 5) Nov 23. Treasury stock Cash (Purchased 30,000 shares of treasury stock) Dec 28. Cash dividend Cash dividend payable (Note:1) 665000 332500 332500 (Plug) 332500 3325000 700000 700000 (Note:2) 112753 112753

Dec 28. (Note:2) 112753 112753 Dec 31. 13218000 13218000 Cash dividend Cash dividend payable (Declared a $0.15-per-share dividend) Income summary Retained earnings (Closed the credit balance of the income summary account) Retained earnings Stock dividends Cash dividend (Closed the two dividends accounts) Dec 31. 777753 665000 112753 Note:1-Stock dividend on July 5. Common stock shares outstanding on July 5: Beginnning balance Common stock Treasury stock Shares issued Treasry stock sold Common stock shares outstanding on July 5 560000 -56000 504000 105000 56000 665000 Stock dividend=665000*5%*20=$ 665000 Stock dividend distributable @par value=665000*5%*10=$ 332500

G 665000 Note:2- Cash dividend payable Common stock shares outstanding on Dec 28: Common stock shares outstanding on July 5 Stock dividend issued Trasury stock purchased Common stock shares outstanding on Dec 28 (665000*5%) 33250 -35000 663250 Cash dividend=663250*0.17=$ 112753