Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity

Question

Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2016, are as follows:

The following selected transactions occurred during the year:

Chart of Accounts

Amount Descriptions

T Accounts

A. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Post the journal entries from part B to the eight selected accounts. No post ref is required in the journal.

Journal

B. Journalize the entries to record the transactions. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

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Retained Earnings Statement

C. Prepare a retained earnings statement for the year ended December 31, 2016. Enter all amounts as positive numbers. The word “Less” is not required. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Morrow Enterprises

Retained Earnings Statement

For the Year Ended December 31, 2016

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Stockholders’ Equity

D. Prepare the Stockholders’ Equity section of the December 31, 2016 balance sheet. “Less” or “Deduct” will automatically appear if it is required. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Stockholders’ Equity

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Paid-in capital:

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Common stock, $20 stated value; 500,000 shares authorized, 352,000 issued $7,040,000 Paid-In Capital in Excess of Stated Value—Common Stock 774,400 Retained Earnings 32,153,000 Treasury Stock (25,200 shares, at cost) 478,800

Explanation / Answer

Answer A. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 22-Jan Cash Dividends Payable          16,340.00 Cash          16,340.00 (record the cash dividend paid) 10-Apr Cash    1,825,000.00 73,000 Shares X $25 Common Stock    1,460,000.00 73,000 Shares X $20 Paid in Capital in Excess of Stated Value - Common Stock        365,000.00 73,000 Shares X $5 (record the issue of common stock) 6-Jun Cash        680,400.00 25,200 Shares X $27 Treasury Stock        478,800.00 25,200 Shares X $19 Paid in Capital in Excess of Stated Value - Treasury Stock        201,600.00 25,200 Shares X $8 (Record the issue of treasury stock) 5-Jul Stock Dividends        531,250.00 425,000 Shares X 5% X $25 Stock Dividends Distributable        425,000.00 21,250 Shares X $20 Paid in Capital in Excess of Stated Value - Common Stock        106,250.00 21,250 Shares X $5 (record the stock dividend declared) 15-Aug Stock Dividends Distributable        425,000.00 Common Stock        425,000.00 (Record the common stock issued as stock dividends) 23-Nov Treasury Stock        450,000.00 25,000 Shares X $18 Cash        450,000.00 25,000 Shares X $18 (record the purchase of treasury stock) 28-Dec Cash Dividends          33,700.00 421,250 Shares X $0.08    Cash Dividends Payable          33,700.00 421,250 Shares X $0.08 (record the cash dividends declared) 31-Dec Retained Earnings        564,950.00 Stock Dividends        531,250.00 Cash Dividends          33,700.00 (Record the close of dividends accounts) 31-Dec Income Summary    1,223,000.00 Retained Earnings    1,223,000.00 (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    7,040,000.00 Beg. Bal            774,400.00 Beg. Bal                        -      1,460,000.00 10-Apr            365,000.00 10-Apr      201,600.00 6-Jun        425,000.00 15-Aug            106,250.00 5-Jul End. Bal.    8,925,000.00 End. Bal.        1,245,650.00 End. Bal.      201,600.00 Cash Dividends Payable Cash Dividends Stock Dividends Beg. Bal          16,340.00 Beg. Bal                       -                33,700.00 31-Dec Beg. Bal                         -        531,250.00 31-Dec 22-Jan          16,340.00          33,700.00 28-Dec 28-Dec        33,700.00 5-Jul       531,250.00 End. Bal.          33,700.00 End. Bal.                       -   End. Bal.                         -   Stock Dividends Distributable Retained Earnings Treasury Stock Beg. Bal                         -   Beg. Bal      32,153,000.00 Beg. Bal       478,800.00      478,800.00 6-Jun 15-Aug        425,000.00        425,000.00 5-Jul 31-Dec      564,950.00        1,223,000.00 31-Dec 23-Nov       450,000.00 End. Bal.                         -   End. Bal.      32,811,050.00 End. Bal.       450,000.00 Answer C. Morrow Enterprises Reatined Earnings Statement For the Year Ended Dec 31, 2016 Beginning Balance, Jan 1, 2016    32,153,000.00 Net Income      1,223,000.00 Sub-Total    33,376,000.00 Stock Dividends        (531,250.00) Cash Dividends          (33,700.00) Ending Balance, Dec 31, 20Y5    32,811,050.00 Answer D. Morrow Enterprises Balance Sheet (Partial) As of Dec 31, 2016 Shareholders' Equity Paid In Capital Common Stock - $20 Par Value (500,000 Shares Authorized, 446,250 issued)      8,925,000.00 Paid in Capital in Excess of Stated Value - Common Stock      1,245,650.00 Paid in Capital in Excess of Stated Value - Treasury Stock          201,600.00 Total Paid-in Capital    10,372,250.00 Retained Earnings    32,811,050.00 Sub-Total    43,183,300.00 Treasury Stock (25,000 Shares)        (450,000.00) Total Shareholders' Equity    42,733,300.00

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