PR $13-4$A Entries for selected corporate transactions

Obj. $3,4,5,7$

Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders' equity accounts of Morrow Enterprises Inc., with balances on January $1,20$X$5,$ are as

follows:

Common Stock, $$20$ stated value $(500,000$ shares authorized, $375,000$ shares issued$)$

Paid In Capital in Excess of Stated Value. Common Stock.

Retained Earnings

Treasury Stock $(25,000$ shares, at cost of $$18$ per share$)..$

$ $7,500,000$

$825,000$

$33,600,000$

$450,000$

The following selected transactions occurred during the year:

Jan. $22.$

Paid cash dividends of so$\mathrm{.}08$ 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 so$\mathrm{.}10-$per$-$share dividend on common stock.

$31.$

INSTRUCTIONS

Closed the two dividends accounts to Retained Earnings.

$1.$ 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$\mathrm{.}3.$ Prepare a retained earnings statement for the year ended December $31,20$Y$5.$

$4.$ Prepare the Stockholders" Equity section of the December $31,20$Y$5,$ balance sheet using Method $1$ of Exhibit $8.$