Question: Morrow Enterprises Inc manufactures bathroom fixtures The stockholders equity accounts

Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2014, 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 cost) . . . . . . . . . . . . . . . . . . . . . . 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 credit balance of the income summary account, $1,125,000.
31. Closed the two dividends accounts to Retained Earnings.

Instructions
1. 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.
2. Journalize the entries to record the transactions, and post to the eight selected accounts.
3. Prepare a retained earnings statement for the year ended December 31, 2014.
4. Prepare the Stockholders’ Equity section of the December 31, 2014, balance sheet.


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  • CreatedFebruary 28, 2014
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