Question

The balance sheet of Morrisey Management Consulting, Inc. at December 31, 2015, reported the following stockholders' equity:

Stockholders’ Equity\begin{array}{c} &\textbf{Stockholders' Equity}\\ \end{array}

Paid-in CapitalCommon Stock -$10 Par Value, 300,000 sharesauthorized,25,000 shares issued and outstanding$250,000Paid-in Capital in Excess of Par-Common320,000Total Paid-In Capital570,000Retained Earnings158,000Total Stockholders’ Equity$720,000\begin{array}{lr} \text{Paid-in Capital}\\ \hspace{7pt}\text{Common Stock -\$10 Par Value, 300,000 shares}\\ \hspace{12pt}\text{authorized,25,000 shares issued and outstanding}&&&&& \$250,000\\ \hspace{7pt}\text{Paid-in Capital in Excess of Par-Common}&&&&&\underline{320,000}\\ \hspace{7pt}\text{Total Paid-In Capital}&&&&&570,000\\ \text{Retained Earnings}&&&&&\underline{158,000}\\ \text{Total Stockholders' Equity}&&&&&\textbf{\underline{\underline{\$720,000}}} \end{array}

During 2016, Morrisey completed the following selected transactions: Feb. 6. Declared a 15% stock dividend on common stock. The market value of Morrisey's stock was $23 per share. 15. Distributed the stock dividend. Jul. 29 Purchased 2,100 shares of treasury stock at$23 per share. Nov. 27. Declared a $0.20 per share cash dividend on the common stock outstanding. Requirements

  1. Record the transactions in the general journal.
  2. Prepare a retained earnings statement for the year ended December 31, 2016. Assume Morrisey's net income for the year was$86,000.
  3. Prepare the stockholders' equity section of the balance sheet at December 31, 2016.

Solutions

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Under this exercise, we are required to journalize the transactions of Morrisey Management Consulting, Inc. and from those to prepare a statement of retained earnings and balance sheet.

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Related questions

accounting

Travel Comfort Specialists, Inc. reported the following stockholders' equity on its balance sheet at June 30, 2016:

Stockholders’ Equity\begin{array}{c} &&&&&&&&&&\textbf{Stockholders' Equity}\\ \end{array}

Paid-in CapitalPreferred Stock-6%, ? Par Value; 675,000 sharesauthorized,200 shares issued and outstanding$1,000,000Common Stock -$1 Par Value, 9,000,000 sharesauthorized, 1,320,000 shares issued and outstanding1,320,000Paid-in Capital in Excess of Par-Common2,700,000Total Paid-In Capital5,020,000Retained Earnings11,900,000Total Stockholders’ Equity$16,920,000\begin{array}{lr} \text{Paid-in Capital}\\ \hspace{7pt}\text{Preferred Stock-6\\\%, ? Par Value; 675,000 shares}\\ \hspace{12pt}\text{authorized,200 shares issued and outstanding}&&&&& \$1,000,000\\ \hspace{7pt}\text{Common Stock -\$1 Par Value, 9,000,000 shares}\\ \hspace{12pt}\text{authorized, 1,320,000 shares issued and outstanding}&&&&&1,320,000\\ \hspace{7pt}\text{Paid-in Capital in Excess of Par-Common}&&&&&\underline{2,700,000}\\ \hspace{7pt}\text{Total Paid-In Capital}&&&&&5,020,000\\ \text{Retained Earnings}&&&&&\underline{11,900,000}\\ \text{Total Stockholders' Equity}&&&&&\textbf{\underline{\underline{\$16,920,000}}} \end{array}

Requirements

  1. Identify the different classes of stock that Travel has outstanding.
  2. What is the par value per share of Travel's preferred stock?
  3. Make two summary journal entries to record issuance of all the Travel stock for cash. Explanations are not required.
  4. No preferred dividends are in arrears. Journalize the declaration of a $900,000 dividend at June 30, 2016, and the payment of the dividend on July 20, 2016. Use separate Dividends Payable accounts for preferred and common stock. An explanation is not required.