Question

Kohler Corporation reports the following components of stockholders' equity on December 31, 2016 Common stock-$20 par value,, 100, ee0 shares authorized, 50,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders equity $1, 000, 0ee ве, е00 460, 000 $1,540, 000 In year 2017, the following transactions affected its stockholders' equity accounts 1 Purchased 5,000 shares of its own stock at $20 cash per share 5 Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record Jan. Jan. Feb. 28 Paid the dividend declared on January 5 July 6 Sold 1,875 of its treasury shares at $24 cash per share Aug. 22 Sold 3,125 of its treasury shares at $17 cash per share 5 Directors declared a $2 per share cash dividend payable on October 28 to the Septenber 25 stockholders of Sept record Oct. 28 Paid the dividend declared on September 5 Dec 31 Closed the $388,000 credit balance (from net income) in the Income Sunary account to Retained Earnings Required 1. Prepare jourmal entries to record each of these transactions for 2017 2. Prepare a statement of retained earnings for the year ended December 31, 2017 3. Prepare the stockholders' equity section of the company's balance sheet as of December 31 2017

Answer 1

1
Date	General Journal	Debit	Credit
1-Jan	Treasury stock, Common	100,000		=5000*20
	Cash		100,000
5-Jan	Retained earnings	90,000		=(50000-5000)*2
	Common dividend payable		90,000
28-Feb	Common dividend payable	90,000
	Cash		90,000
6-Jul	Cash	45,000		=1875*24
	Treasury stock, Common		37,500	=1875*20
	Paid-in capital, Treasury stock		7,500
22-Aug	Cash	53,125		=3125*17
	Paid-in capital, Treasury stock	7,500
	Retained earnings	1,875
	Treasury stock, Common		62,500	=3125*20
5-Sep	Retained earnings	100,000		=50000*2
	Common dividend payable		100,000
28-Oct	Common dividend payable	100,000
	Cash		100,000
31-Dec	Income summary	388,000
	Retained earnings		388,000
2
	KOHLER CORPORATION
	Statement of Retained Earnings
	For Year Ended December 31, 2017
	Retained earnings, Dec. 31, 2016	460,000
	Add: Net income	388,000
		848,000
	Less: Cash dividends declared	(190,000)
	Less: Treasury stock reissuances	(1,875)
	Retained earnings, Dec. 31, 2017	656,125
3
	KOHLER CORPORATION
	Stockholders' Equity Section of the Balance Sheet
	December 31, 2017
	Common stock - $20 par value	1,000,000
	Paid-in capital in excess of par value, common stock	80,000
	Total contributed capital	1,080,000
	Retained earnings	656,125
	Total stockholders' equity	1,736,125