Question

Kohler Corporation reports the following components of stockholders’ equity at December 31, 2018.

Common stock—$25 par value, 100,000 shares authorized, 60,000 shares issued and outstanding	$	1,500,000
Paid-in capital in excess of par value, common stock		80,000
Retained earnings		370,000
Total stockholders' equity	$	1,950,000

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

Jan.		2		Purchased 4,500 shares of its own stock at $20 cash per share.
Jan.		5		Directors declared a $6 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 1,688 of its treasury shares at $24 cash per share.
Aug.		22		Sold 2,812 of its treasury shares at $17 cash per share.
Sept.		5		Directors declared a $6 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.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare journal entries to record each of these transactions. View transaction list Journal entry worksheet 1 2 3 4 5 6 7 8 Record the purchase of 4,500 shares of its own common stock for $20 cash per share. Note: Enter debits before credits. Debit Credit Date Jan 02 General Journal Treasury stock, Common Cash Record entry Clear entry View general journal

Answer 1

Date	General Journal	Debit	Credit
1-Jan	Treasury stock, Common	90,000
	Cash		90,000
	(4500*20)
5-Jan	Retained earnings	333,000
	Common dividend payable		333,000
	(60000-4500)*6
28-Feb	Common dividend payable	333,000
	Cash		333,000
6-Jul	Cash 1688*24	40,512
	Treasury stock, Common 1688*20		33,760
	Paid-in capital, Treasury stock		6,752
22-Aug	Cash 2812*17	47,804	2.4
	Paid-in capital, Treasury stock	6,752
	Retained earnings (B/f)	1,684
	Treasury stock, Common 2812*20		56,240
5-Sep	Retained earnings	360000
	Common dividend payable		360,000
	(60000-4500+1688+2812)*6
28-Oct	Common dividend payable	360,000
	Cash		360,000
31-Dec	Income summary	408,000
	Retained earnings		408000

KOHLER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, Dec. 31, 2018	370,000
Add: Net income	408,000
	778,000
Less: Cash dividends declared	(693,000)
Less: Treasury stock reissuances	(1,684)
Retained earnings, Dec. 31, 2016	83,316

KOHLER CORPORATION
Stockholders' Equity Section of the Balance Sheet
31-Dec-19
Common stock - $10 par value	1,500,000
Paid-in capital in excess of par value, common stock	80,000
Total contributed capital	1,580,000
Retained earnings	83,316
Total stockholders' equity	1,663,316