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takeAssignment/takeAssignmentMain.do?invoker-assignments&takeAssignmentSessionLocator-assignment-take;&inprogress-false; eBook 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, 420,000 shares issued) Paid-In Capital in Excess of Stated Value-Common Stock Retained Earnings Treasury Stock (42,000 shares, at cost) The following selected transactions occurred during the year: Calculator $4,200,000 800,000 9,530,000 630,000 Jan. 22. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when dedared on December 1 of the preceding fiscal year for $49,140 Apr. 10. Issued 80,000 shares of common stock for $1,280,000. 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 26,000 shares of treasury stock for $20 per share. Dec. 28. Declared a $0.16-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $9,911,000. 31. Closed the two dividends accounts to Retained Earnings. Required:Explanation / Answer
Answer A. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 22-Jan Cash Dividends Payable 49,140.00 Cash 49,140.00 (record the cash dividend paid) 10-Apr Cash 1,280,000.00 80,000 Shares X $16 Common Stock 800,000.00 80,000 Shares X $10 Paid in Capital in Excess of Stated Value - Common Stock 480,000.00 80,000 Shares X $6 (record the issue of common stock) 6-Jun Cash 756,000.00 42,000 Shares X $18 Treasury Stock 630,000.00 42,000 Shares X $15 Paid in Capital in Excess of Stated Value - Treasury Stock 126,000.00 42,000 Shares X $3 (Record the issue of treasury stock) 5-Jul Stock Dividends 450,000.00 500,000 Shares X 5% X $18 Stock Dividends Distributable 250,000.00 25,000 Shares X $10 Paid in Capital in Excess of Stated Value - Common Stock 200,000.00 25,000 Shares X $8 (record the stock dividend declared) 15-Aug Stock Dividends Distributable 250,000.00 Common Stock 250,000.00 (Record the common stock issued as stock diveodends) 23-Nov Treasury Stock 520,000.00 26,000 Shares X $20 Cash 520,000.00 26,000 Shares X $20 (Record the purchase of Treasury Stock) 28-Dec Cash Dividends 79,840.00 499,000 Shares X $0.16 Cash Dividends Payable 79,840.00 499,000 Shares X $0.16 (record the cash dividends declared) 31-Dec Retained Earnings 529,840.00 Stock Dividends 450,000.00 Cash Dividends 79,840.00 (Record the close of dividends accounts) 31-Dec Income Summary 9,911,000.00 Retained Earnings 9,911,000.00 (Record the net income earned during the year) Answer B. Common Stock Paid in Capital in Excess of Stated Value - Common Stock Paid in Capital in Excess of Stated Value - Treasury Stock Beg. Bal 4,200,000.00 Beg. Bal 800,000.00 Beg. Bal - 800,000.00 10-Apr 480,000.00 10-Apr 126,000.00 6-Jun 250,000.00 15-Aug 200,000.00 5-Jul End. Bal. 5,250,000.00 End. Bal. 1,480,000.00 End. Bal. 126,000.00 Cash Dividends Payable Cash Dividends Stock Dividends Beg. Bal 49,140.00 Beg. Bal - 79,840.00 31-Dec Beg. Bal - 450,000.00 31-Dec 22-Jan 49,140.00 79,840.00 28-Dec 28-Dec 79,840.00 5-Jul 450,000.00 End. Bal. 79,840.00 End. Bal. - End. Bal. - Stock Dividends Distributable Retained Earnings Treasury Stock Beg. Bal - Beg. Bal 9,530,000.00 Beg. Bal 630,000.00 630,000.00 6-Jun 15-Aug 250,000.00 250,000.00 5-Jul 31-Dec 529,840.00 9,911,000.00 31-Dec 23-Nov 520,000.00 End. Bal. - End. Bal. 18,911,160.00 End. Bal. 520,000.00 Answer C. Morrow Enterprises Reatined Earnings Statement For the Year Ended Dec 31, 20Y6 Beginning Balance, Jan 1, 20Y5 9,530,000.00 Net Income 9,911,000.00 Sub-Total 19,441,000.00 Stock Dividends (450,000.00) Cash Dividends (79,840.00) Ending Balance, Dec 31, 20Y5 18,911,160.00 Answer D. Morrow Enterprises Balance Sheet (Partial) As of Dec 31, 20Y5 Shareholders' Equity Paid In Capital Common Stock - $10 Par Value (650,000 Shares Authorized, 525,000 issued) 5,250,000.00 Paid in Capital in Excess of Stated Value - Common Stock 1,480,000.00 Paid in Capital in Excess of Stated Value - Treasury Stock 126,000.00 Total Paid-in Capital 6,856,000.00 Retained Earnings 18,911,160.00 Sub-Total 25,767,160.00 Treasury Stock (26,000 Shares) (520,000.00) Total Shareholders' Equity 25,247,160.00
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