Answer:
A) Entering the January 1 Balances in T-Accounts for ther Stockholders Equity Accounts Listed:
Common Stock
Jan. 1 Bal. $7,340,000
Apr. 10 $1,420,000
Aug. 15 $262,800
Dec. 31 Bal $9,022,800
Paid-In Capital in Excess of Stated Value - Common Stock
Jan. 1 Bal. $844,100
Apr. 10 $213,000
July 5 $78,840
Dec. 31 Bal $1,135,940
Retained Earnings
Dec 31 $379,723 Jan. 1 Bal. $33,388,000
Dec 31 $1,131,500
Dec. 31 Bal $34,519,500
Treasury Stock
Jan. 1 Bal. $341,640 June 6 $341,640
Nov 23 $504,000
Dec. 31 Bal $504,000
Paid-In Capital from Sale of Treasury Stock
June 6 $228,000
Stock Dividends Distributable
Aug 15 $262,800 July 5 $262,800
Stock Dividends
July 5 $341,640 Dec 31 $341,640
Cash Dividends
Dec 28 $38,083 Dec 31 $38,083
B) Preparing the Journal Entries to Record the Transactions:
Date General Journal Debit Credit
Jan 22 Cash Dividends Payable
[(367,000 shares - 22,800 shares) * $0.09] $30,978
Cash $30,978
-Look below for more explanation
Explanation:
A) Entering the January 1 Balances in T-Accounts for ther Stockholders Equity Accounts Listed:
Common Stock
Jan. 1 Bal. $7,340,000
Apr. 10 $1,420,000
Aug. 15 $262,800
Dec. 31 Bal $9,022,800
Paid-In Capital in Excess of Stated Value - Common Stock
Jan. 1 Bal. $844,100
Apr. 10 $213,000
July 5 $78,840
Dec. 31 Bal $1,135,940
Retained Earnings
Dec 31 $379,723 Jan. 1 Bal. $33,388,000
Dec 31 $1,131,500
Dec. 31 Bal $34,519,500
Treasury Stock
Jan. 1 Bal. $341,640 June 6 $341,640
Nov 23 $504,000
Dec. 31 Bal $504,000
Paid-In Capital from Sale of Treasury Stock
June 6 $228,000
Stock Dividends Distributable
Aug 15 $262,800 July 5 $262,800
Stock Dividends
July 5 $341,640 Dec 31 $341,640
Cash Dividends
Dec 28 $38,083 Dec 31 $38,083
B) Preparing the Journal Entries to Record the Transactions:
Date General Journal Debit Credit
Jan 22 Cash Dividends Payable
[(367,000 shares - 22,800 shares) * $0.09] $30,978
Cash $30,978
Apr 10 Cash (71,000 shares * $23) $1,633,000
Common Stock $1,420,000
(71,000 shares * $20)
Paid-In Capital in Excess $213,000
of Stated Value - Common Stock
[71,000 shares à ($23 - $20)]
June 6 Cash (22,800 shares * $27) $615,600
Treasury Stock (22,800 shares * $17) $387,600
Paid-In Capital from Sale of
Treasury Stock [22,800 shares * ($27 - $17)] $228,000
July 5 Stock Dividends [(367,000 $341,640
shares + 71,000 shares) * 3% * $26]
Stock Dividends Distributable (13,140 shares * $20) $262,800
Paid-In Capital in Excess of Stated
Value Common Stock [13,140 shares * ($26 - $20)] $78,840
Aug 15 Stock Dividends Distributable $262,800
Common Stock $262,800
Nov 23 Treasury Stock (28,000 shares * $18) $504,000
Cash $504,000
Dec 28 Cash Dividends [(367,000 shares
+ 71,000 shares + 13,140 $38,083
shares - 28,000 shares) * $0.09]
Cash Dividends Payable $38,083
Dec 31 Income Summary $1,131,500
Retained Earnings $1,131,500
Dec 31 Retained Earnings $379,723
Stock Dividends $341,640
Cash Dividends $38,083
C) Preparing a Retained Earnings Statement for the Year Ended December 31, 2015:
MORROW ENTERPRISES INC.
Retained Earnings Statement
For the Year Ended December 31, 2015
Retained earnings, January 1, 2015 $33,388,000
Net Income $1,131,500
Less: Cash dividends ($38,083)
Stock dividends ($341,640)
Increase in retained earnings $751,777
Retained earnings, December 31, 2015 $34,139,777
D) Preparing the Stockholder's Equity Section of the December 31, 2015, Balance Sheet:
Stockholdersâ Equity
Paid-in capital:
Common stock, $20 stated value
(500,000 shares authorized, 451,140 $9,022,800
shares issued)
Excess of issue price over stated value $1,135,940
From sale of treasury stock $228,000
Total paid-in capital $10,386,740
Retained earnings $34,139,777
Total $44,526,517
Deduct treasury stock 28,000 shares at cost) $504,000
Total stockholdersâ equity $44,022,517
