Question

Kohler Corporation reports the following components of stockholders' equity at December 31, 2018 Common stock-$20 par value, 100,000 shares authorized, 40,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 800,000 80,000 400,000 $1,280,000 During 2019, the following transactions affected its stockholders' equity accounts. Jan. Jan. Feb. July Aug. Sept. Oct. Dec. 2 Purchased 5,500 shares of its own stock at $15 cash per share. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. 28 Paid the dividend declared on January 5. 6 Sold 2,063 of its treasury shares at $19 cash per share. 22 Sold 3,437 of its treasury shares at $12 cash per share. 5 Directors declared a $4 per share cash dividend payable on October 28 to the September 25 stockholders of record. 28 Paid the dividend declared on September 5. 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	82,500		=5500*15
	Cash		82,500
5-Jan	Retained earnings	138,000		=(40000-5500)*4
	Common dividend payable		138,000
28-Feb	Common dividend payable	138,000
	Cash		138,000
6-Jul	Cash	39,197		=2063*19
	Treasury stock, Common		30,945	=2063*15
	Paid-in capital, Treasury stock		8,252
22-Aug	Cash	41,244		=3437*12
	Paid-in capital, Treasury stock	8,252
	Retained earnings	2,059
	Treasury stock, Common		51,555	=3437*15
5-Sep	Retained earnings	160,000		=40000*4
	Common dividend payable		160,000
28-Oct	Common dividend payable	160,000
	Cash		160,000
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	400,000
	Add: Net income	408,000
		808,000
	Less: Cash dividends declared	-298,000
	Less: Treasury stock reissuances	-2,059
	Retained earnings, Dec. 31, 2019	507,941
3
	KOHLER CORPORATION
	Stockholders' Equity Section of the Balance Sheet
	December 31, 2019
	Common stock - $20 par value	800,000
	Paid-in capital in excess of par value, common stock	80,000
	Total contributed capital	880,000
	Retained earnings	507,941
	Total stockholders' equity	1,387,941