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Chapter 11 Corporations: Organization, Stock Transactions, and Dividends
Instructions
Journalize the entries to record the transactions. Identify each entry by letter. PR 11-4A
Entries for selected corporate transactions
OBJ. 2, 3, 4, 5
Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity ac- counts 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 mar- ket 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.
PR 11-5A Entries for selected corporate transactions
OBJ. 2, 3, 4, 6
Selected transactions completed by Primo Discount Corporation during the current fiscal year are as follows:
Jan. 9. Split the common stock 3 for 1 and reduced the par from 75 to 25 per share. After the split, there were 1,200,000 common shares outstanding.
Feb. 28. Purchased 40,000 shares of the corporation’s own common stock at 28, recording the stock at cost.
May 1. Declared semiannual dividends of 0.80 on 75,000 shares of preferred stock and 0.12 on the common stock to stockholders of record on June 1, payable
on July 10. July 10. Paid the cash dividends.
Sept. 7. Sold 30,000 shares of treasury stock at 34, receiving cash. Oct. 1. Declared semiannual dividends of 0.80 on the preferred stock and 0.12 on
the common stock before the stock dividend. In addition, a 2 common stock dividend was declared on the common stock outstanding. The fair mar-
ket value of the common stock is estimated at 36. Dec. 1. Paid the cash dividends and issued the certificates for the common stock dividend.
Instructions
Journalize the transactions.
4. Total stockholders’ equity,
44,436,200
Oct. 1, cash dividends, 202,800
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Chapter 11 Corporations: Organization, Stock Transactions, and Dividends
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