Question

can i get both the answers and an explanation as to where the numbers came from thank you!

Kohler Corporation reports the following components of stockholders' equity at December 31, 2018 Common stock-$25 par value, 100,000 shares authorized 45,000 shares issued and outstanding Paid.in capital in excess of par value, common stock Retained earnings Total stockholders' equity $1,125,000 60,000 430,000 $1,615,000 During 2019, the following transactions affected its stockholders' equity accounts. Jan. 2 Purchased 4,500 shares of its own stock at $15 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 $19 cash per share Aug 22 Sold 2,812 of its treasury shares at $12 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.

Answer 1

Date Account Titles and Explanation Debit Credit Jan-02 $ 67,500 Treasury Stock-Common Stock Cash (Being 4500 own shares purchased) $ 67,500 $2,43,000 Jan-05 Cash Dividend Dividend Payable (Being dividend declared on common stock) $ 2,43,000 $ 2,43,000 Feb-28 Dividend Payable Cash (Being dividend paid) $ 2,43,000 Jul-06 $ 32,072 Cash Treasury Stock-Common Stock Paid-In Capital from Treasury Transactions (Being 1688 shares resold from treasury) $ $ 25,320 6,752 Aug-22 Cash Paid-In Capital from Treasury Transactions Retained Earnings Treasury Stock-Common Stock (Being 2812 shares resold from treasury) $ $ $ 33,744 6,752 1,684 $ 42,180

Sep-05 $2,70,000 Cash Dividend Dividend Payable (Being dividend declared on common stock) $2,70,000 $2,70,000 Oct-28 Dividend Payable Cash (Being dividend paid) $2,70,000 $4,08,000 Dec-31 Income Summary Retained Earnings (Being credit balance in income summary transfered) $4,08,000 $5,13,000 Dec-31 Retained Earnings Cash Dividend (Being dividend account closed) $5,13,000

Workings: Jan-02 Treasury Stock-Common Stock = No of shares purchased x price per share = 4,500 x $15 = $ 67,500 Jan-05 Cash Dividend = (No of Common Shares outstanding - No of Treasury stock) x dividend per share = (45,000 - 4,500) < $6 = $ 2,43,000 Jul-06 Treasury Stock-Common Stock = No of shares sold x purchase price per share = 1,688 x $ 15 = $ 25,320 Paid-In Capital from Treasury Transactions = No of shares sold x (sale price per share - purchase price per share) = 1,688 x ($19 - $15) = $ 6,752

Aug-22 Treasury Stock-Common Stock = No of shares sold x purchase price per share = 2,812 x $ 15 = $ 42,180 Paid-In Capital from Treasury Transactions = $ 6,752 Retained Earnings = [No of shares sold x (purchase price per share-sale price per share)] - Paid-In Capital from Treasury Transactions = (2,812 x ($15 - $12) - $ 6,752] = $ 8,436 - $ 6,752 = $ 1,684 The loss on sale of treasury is first adjusted against credit balance in Paid-In Capital from Treasury transactions and then from Retained Earnings. Here the loss on sale of treasury stock = 2,812 x $ 3, i.e, $ 8,436 Sep-05 Cash Dividend = (No of Common Shares outstanding - No of Treasury stock) x dividend per share = (45,000 - 0) < $6 = $ 2,70,000 Dec-31 Cash Dividend = Total Dividend paid during the year = 243,000 + 270,000 = $5,13,000