Question

NEED HELP ASA P

Kohler Corporation reports the following components of stockholders’ equity at December 31, 2018. Common stock—$15 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $ 675,000

Paid-in capital in excess of par value, common stock 70,000

Retained earnings 430,000

Total stockholders' equity $ 1,175,000

During 2019, the following transactions affected its stockholders’ equity accounts.

Jan. 2 Purchased 6,000 shares of its own stock at $15 cash per share.

Jan. 5 Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record.

Feb. 28 Paid the dividend declared on January 5.

July 6 Sold 2,250 of its treasury shares at $19 cash per share.

Aug. 22 Sold 3,750 of its treasury shares at $12 cash per share.

Sept. 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record.

Oct. 28 Paid the dividend declared on September 5.

Dec. 31 Closed the $408,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Required:

1. Prepare journal entries to record each of these transactions.

2. Prepare a statement of retained earnings for the year ended December 31, 2019.

3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2019.

Answer 1

1
Date	General Journal	Debit	Credit
2-Jan	Treasury stock, Common	90,000		=6000*15
	Cash		90,000
5-Jan	Retained earnings	78,000		=(45000-6000)*2
	Common dividend payable		78,000
28-Feb	Common dividend payable	78,000
	Cash		78,000
6-Jul	Cash	42,750		=2250*19
	Treasury stock, Common		33,750	=2250*15
	Paid-in capital, Treasury stock		9,000
22-Aug	Cash	45,000		=3750*12
	Paid-in capital, Treasury stock	9,000
	Retained earnings	2,250
	Treasury stock, Common		56,250	=3750*15
5-Sep	Retained earnings	90,000		=45000*2
	Common dividend payable		90,000
28-Oct	Common dividend payable	90,000
	Cash		90,000
31-Dec	Income summary	408,000
	Retained earnings		408,000
2
	KOHLER CORPORATION
	Statement of Retained Earnings
	For Year Ended December 31, 2019
	Retained earnings, Dec. 31, 2018	430,000
	Add: Net income	408,000
		838,000
	Less: Cash dividends declared	-168,000
	Less: Treasury stock reissuances	-2,250
	Retained earnings, Dec. 31, 2019	667,750
3
	KOHLER CORPORATION
	Stockholders' Equity Section of the Balance Sheet
	December 31, 2019
	Common stock - $15 par value	675,000
	Paid-in capital in excess of par value, common stock	70,000
	Total contributed capital	745,000
	Retained earnings	667,750
	Total stockholders' equity	1,412,750