Question

Entries for Selected Corporate Transactions Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises’ stockholders’ equity accounts, with balances on January 1, 20Y6, are as follows: Common Stock, $10 stated value (650,000 shares authorized, 440,000 shares issued) $4,400,000 Paid-In Capital in Excess of Stated Value-Common Stock 850,000 Retained Earnings 9,990,000 Treasury Stock (44,000 shares, at cost) 660,000 The following selected transactions occurred during the year: Jan. 22. Paid cash dividends of $0.12 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $47,520. Apr. 10. Issued 85,000 shares of common stock for $1,360,000. June 6. Sold all of the treasury stock for $18 per share. July 5. Declared a 5% Stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share. Aug. 15. Issued shares of stock for the stock dividend declared on July 5. Nov. 23. Purchased 28,000 shares of treasury stock for $20 per share. Dec. 28. Declared a $0.15-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $10,390,000. 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. If required, round to one decimal place.

Answer 1

Morrow Enterprises

T Accounts

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Common Stock

Paid in Capital in Excess of Stated Value-CS

Retained Earnings

Treasury Stock

Op bal

4,400,000.0

Op bal

850,000.0

31-Dec

472,500.0

Op bal

9,990,000.0

Op bal

660,000.0

6-Jun

660,000.0

10-Apr

850,000.0

10-Apr

510,000.0

31-Dec

78,487.5

31-Dec

10,390,000.0

23-Nov

560,000.0

15-Aug

262,500.0

5-Jul

210,000.0

Bal.

5,512,500.0

Bal.

1,570,000.0

Bal.

19,829,012.5

Bal.

560,000.0

Paid in Capital from Sale of Treasury Stock

Stock Dividends Distributable

Stock Dividends

Cash Dividends

6-Jun

132,000.0

15-Aug

262,500.0

5-Jul

262,500.0

5-Jul

472,500.0

31-Dec

472,500.0

28-Dec

78,487.5

31-Dec

78,487.5

Bal.

132,000.0

Bal.

-

Bal.

-

Bal.

-

Morrow Enterprises
Statement of Retained Earnings
As of Dec 31, 20Y7
Common Stock - $10 stated value (650,000 shares authorized, 551,250 shares issued & 523,250 shares outstanding)	5,512,500.0
Paid in Capital in Excess of Stated Value-Common Stock	1,570,000.0
Paid in Capital from Sale of Treasury Stock	132,000.0
Total Paid in Capital		7,214,500.0
Retained Earnings		19,829,012.5
Total Paid in Capital & Retained Earnings		27,043,512.5
Less: Treasury Stock (28,000 shares @ $20 per share)		(560,000.0)
Total Stockholders Equity		26,483,512.5