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

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

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

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.

Winterborn Manufacturing Co. completed the following transactions during 2016: Jan. 16. Declared a cash dividend on the 4%, $100 par noncumulative preferred stock (950 shares outstanding). Declared a$0.40 per share dividend on the 95,000 shares of $4 par value common stock outstanding. The date of record is January 31, and the payment date is February 15. Feb. 15. Paid the cash dividends. Jun. 10. Split common stock 2-for-1. Jul. 30. Declared a 50% stock dividend on the common stock. The market value of the common stock was$10 per share. Aug. 15. Distributed the stock dividend. Oct. 26. Purchased 1,400 shares of treasury stock at $9 per share. Nov. 8. Sold 700 shares of treasury stock for$11 per share. 30. Sold 500 shares of treasury stock for $6 per share. Requirements

1. Record the transactions in Winterborn's general journal.
2. Prepare the Winterborn's stockholders' equity section of the balance sheet as of December 31, 2016. Assume that Winterborn was authorized to issue 2,400 shares of preferred stock and 500,000 shares of common stock. Both preferred stock and common stock were issued at par. The ending balance of retained earnings as of December 31, 2016, is$2,080,000.

"C-Cell Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes C-Cell to issue 50,000 shares of 7%, $50 par value cumulative preferred stock and 120,000 shares of$2 par value common stock. During the first month, C-Cell completed the following transactions: Oct. 2. Issued 22,000 shares of common stock for a building with a market value of $120,000. 6. Issued 900 shares of preferred stock for$70 per share. 9. Issued 12,000 shares of common stock for cash of $60,000. 10. Declared a$16,000 cash dividend for stockholders of record on Oct. 20. Use a separate Dividends Payable account for preferred and common stock. 25. Paid the cash dividend. Requirements

1. Record the transactions in the general journal.
2. Prepare the stockholders' equity section of C-Cell's balance sheet at October 31, 2016. Assume C-Cell's net income for the month was $96,000. "

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

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

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

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.

John and Michael are opening a paint store. There are no competing paint stores in the area. They must decide how to organize the business. They anticipate profits of $100,000 the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They seek your advice. Requirements

1. What is the main advantage they gain by selecting a corporate form of business now?
2. Would you recommend they initially issue preferred or common stock? Why?
3. If they decide to issue$ 10 par common stock and anticipate an initial market price of $40 per share, how many shares will they need to issue to raise$2,250,000?