50.1K

Verified Solution

Link Copied!

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 (500,000 shares authorized, 320,000 shares issued)	$3,200,000
Paid-In Capital in Excess of Stated Value-Common Stock	600,000
Retained Earnings	7,260,000
Treasury Stock (32,000 shares, at cost)	480,000

The following selected transactions occurred during the year:

Jan. 22.	Paid cash dividends of $0.14 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $40,320.
Apr. 10.	Issued 60,000 shares of common stock for $1,080,000.
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 $20 per share.
Aug. 15.	Issued shares of stock for the stock dividend declared on July 5.
Nov. 23.	Purchased 20,000 shares of treasury stock for $20 per share.
Dec. 28.	Declared a $0.17-per-share dividend on common stock.
31.	Closed the credit balance of the income summary account, $7,550,000.
31.	Closed the two dividends accounts to Retained Earnings.

Required:

1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate. If required, round to one decimal place.

2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.

Jan. 22. Paid cash dividends of $0.14 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $40,320.

Apr. 10. Issued 60,000 shares of common stock for $1,080,000.

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 $20 per share.

Aug. 15. Issued shares of stock for the dividend declared on July 5.

Nov. 23. Purchased 20,000 shares of treasury stock for $20 per share.

Dec. 28. Declared a $0.17-per-share dividend on common stock.

Dec. 31. Closed the credit balance of the income summary account, $7,550,000.

Dec. 31. Closed the two dividends accounts to Retained Earnings.

3. Prepare a retained earnings statement for the year ended December 31, 20Y6.

4. Prepare the Stockholders' Equity section of the December 31, 20Y6, balance sheet

Answer & Explanation Solved by verified expert

See Answer