Entries for selected corporate transactions
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.