Morrow Enterprises Inc. manufactures bathroom fixtures. Morrow Enterprises’ stockholders’ equity accounts, with balances on January 1, 20Y6, are as follows:
Common stock, $20 stated value (500,000 shares authorized, 353,000 shares issued) $7,060,000
Paid-In Capital in Excess of Stated Value—Common Stock 811,900
Retained Earnings 33,598,000
Treasury Stock (25,500 shares, at cost) 484,500
The following selected transactions occurred during the year:
Jan. 22 Paid cash dividends of $0.10 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $32,750.
Apr. 10 Issued 72,000 shares of common stock for $24 per share.
Jun. 6 Sold all of the treasury stock for $25 per share.
Jul. 5 Declared a 4% Stock dividend on common stock, to be capitalized at the market price of the stock, which is $26 per share.
Aug. 15 Issued the certificates for the dividend declared on July 5.
Nov. 23 Purchased 25,000 shares of treasury stock for $19 per share.
Dec. 28 Declared a $0.09-per-share dividend on common stock.
31 Closed the two dividends accounts to Retained Earnings.
Required:
1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. If required, round your answers to the nearest dollar.
2. Journalize the entries to record the transactions, and post to the eight selected accounts. Assume that the closing entry for revenues and expenses has been made and post net income of $1,149,500 to the retained earnings account. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar.
3. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y6. Assume that net income was $1,149,500 for the year ended December 31, 20Y6. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is an amount is zero, enter "0".*
4. Prepare the “Stockholders’ Equity” section of the December 31, 20Y6, balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign.*