Reference no: EM131920545

Problem

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

Common stock, $20 stated value; 500,000 shares authorized, 399,000 issued $7,980,000
Paid-In Capital in Excess of Stated Value-Common Stock 877,800
Retained Earnings 34,554,000
Treasury Stock (22,500 shares, at cost) 382,500

The following selected transactions occurred during the year:

Jan. 22 Paid cash dividends of $0.07 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $26,355.

Apr. 10 Issued 73,000 shares of common stock for $23 per share.

Jun. 6 Sold all of the treasury stock for $26 per share.

Jul. 5 Declared a 2% stock dividend on common stock, to be capitalized at the market price of the stock, which is $24 per share.

Aug. 15 Issued the certificates for the dividend declared on July 5.

Nov. 23 Purchased 30,000 shares of treasury stock for $20 per share.

Dec. 28 Declared a $0.09-per-share dividend on common stock.

31 Closed the credit balance of the income summary account, $1,162,500.

31 Closed the two dividends accounts to Retained Earnings.

Required:

A. Enter the January 1 balances in T accounts for the stockholders' equity accounts listed.

B. Journalize the entries to record the transactions, and post to the eight selected accounts. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles.

C. Prepare a retained earnings statement for the year ended December 31, 2016. Enter all amounts as positive numbers. The word "Less" is not required.*

D. Prepare the Stockholders' Equity section of the December 31, 2016, balance sheet. "Less" or "Deduct" will automatically appear if it is required. *

* Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.