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29 July, 03:17

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

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  1. 29 July, 03:43
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    The answer is: Jan. 7. Paid cash dividends of $0.18 per share on the common stock. The dividend had been properly recorded when declared on Nov 30 of the preceding fiscal year for $66,600.

    Dr Common Dividends Payable 66,000

    Cr Cash 66,000

    Feb. 9. Issued 50,000 shares of common stock for $600,000

    Dr Cash 600,000

    Cr Common Stock 400,000 (50,000 x $8 par value)

    Cr Additional Paid-In Capital 200,000

    May 21. Sold all of the treasury stock for $300,000

    Dr Cash 300,000

    Cr Common (Treasury) Stock 240,000

    Cr Additional Paid-In Capital 60,000

    July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $13 per share.

    400,000 - 30,000 + 50,000 + 30,000 = 450,000 shares outstanding

    Dr Stock Dividends 234,000 (450,000 x 4% x $13 market price)

    Cr Stock Dividends Distributable 144,000 (450,000 x 4% x 8 par value)

    Cr Additional Paid-In Capital 90,000 (450,000 x 4% x 5 excess of par value)

    Aug. 15. Issued the certificates for the dividend declared on July 1

    Dr Stock Dividends Distributable 144,000

    Cr Common Stock 144,000

    Sept. 30. Purchased 10,000 shares of treasury stock for $100,000.

    Dr Common (Treasury) Stock 100,000

    Cr Cash 100,000

    Dec 27. Declared a $0.20-per-share dividend on common stock

    400,000 - 30,000 + 50,000 + 30,000 + 18,000 - 10,000 = 458,000 shares now outstanding

    Dr Cash Dividends 91,600 (458,000 x $0.20)

    Cr Common Dividends Payable 91,600

    31. Closed the credit balance of the income summary account, $485,000.

    Dr Income Summary 485,000

    Cr Retained Earnings 485,000

    31. Closed the two dividends accounts to Retained Earnings.

    Dr Retained Earnings 234,000

    Cr Stock Dividends 234,000

    Dr Retained Earnings 91,000

    Cr Cash Dividends 91,000

    3)

    7,100,000 Beginning balance

    + 485,000

    - 234.000

    - 91,000

    = 7,260,000 Ending balance

    4)

    3,824,000 Common Stock (468,000 x 8)

    + 950,000 Additional Paid-In Capital (600,000 + 200,000 + 60,000 + 90,000)

    + 7,260,000 Retained Earnings

    - 100,000 Treasury Stock

    = 11,934,000 Total Stockholders' Equity
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