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Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 20Y5, are as follows:
Common stock, $20 stated value (500,000 shares authorized, 353,000 shares issued) | $7,060,000 |
Paid-In Capital in Excess of Stated Value—Common Stock | 811,900 |
33,598,000 | |
484,500 |
The following selected transactions occurred during the year:
Jan. | 22 | Paid cash dividends of $0.10 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $32,750. |
Apr. | 10 | Issued 72,000 shares of common stock for $24 per share. |
Jun. | 6 | Sold all of the treasury stock for $25 per share. |
Jul. | 5 | Declared a 4% 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 25,000 shares of treasury stock for $19 per share. |
Dec. | 28 | Declared a $0.09-per-share dividend on common stock. |
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. Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends. |
b. | |
c. | Prepare a retained earnings statement for the year ended December 31, 20Y5. Assume that Morrow Enterprises had net income for the year ended December 31, 20Y5, of $1,149,500. Be sure to complete the statement heading. A decrease to retained earnings should be entered as a negative amount. |
d. | Prepare the Stockholders’ Equity section of the December 31, 20Y5, |
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