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, 375,000 shares issued) $ 7,500,000 Paid-In Capital in Excess of Stated Value—Common Stock 825,000 Retained Earnings 33,600,000 Treasury Stock (25,000 shares, at a cost of $18 per share) 450,000 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 $28,000. Apr. 10. Issued 75,000 shares of common stock for $24 per share. June 6. Sold all of the treasury stock for $26 per share. July 5. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $25 per share. Aug. 15. Issued the certificates for the dividend declared on July 5. Nov. 23. Purchased 30,000 shares of treasury stock for $19 per share. Dec. 28. Declared a $0.10-per-share dividend on common stock. 31. Closed the two dividends accounts to Retained Earnings. INSTRUCTIONS 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. Journalize the entries to record the transactions and post to the eight selected accounts. 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 $1,125,000. Prepare the Stockholders’ Equity section of the December 31, 20Y5, balance sheet using Method 1 of Exhibit 8.
Morrow Enterprises Inc. manufactures bathroom fixtures. The
|
Common Stock, $20 stated value (500,000 shares authorized, 375,000 shares issued) |
$ 7,500,000 |
|
Paid-In Capital in Excess of Stated Value—Common Stock |
825,000 |
|
|
33,600,000 |
|
|
450,000 |
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 $28,000. |
|
Apr. 10. |
Issued 75,000 shares of common stock for $24 per share. |
|
June 6. |
Sold all of the treasury stock for $26 per share. |
|
July 5. |
Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $25 per share. |
|
Aug. 15. |
Issued the certificates for the dividend declared on July 5. |
|
Nov. 23. |
Purchased 30,000 shares of treasury stock for $19 per share. |
|
Dec. 28. |
Declared a $0.10-per-share dividend on common stock. |
|
31. |
Closed the two dividends accounts to Retained Earnings. |
INSTRUCTIONS
-
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.
-
Journalize the entries to record the transactions and post to the eight selected accounts. -
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 $1,125,000.
-
Prepare the Stockholders’ Equity section of the December 31, 20Y5, balance sheet using Method 1 of Exhibit 8.
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