Question

Problem 11-2A

Cash dividends, treasury stock, and statement of retained earnings LO C3, P2, P3 Kohler Corporation reports the following components of stockholders’ equity at December 31, 2018. Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital in excess of par value, common stock 80,000 Retained earnings 400,000 Total stockholders' equity $ 1,580,000 During 2019, the following transactions affected its stockholders’ equity accounts. Jan. 2 Purchased 5,000 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 1,875 of its treasury shares at $19 cash per share. Aug. 22 Sold 3,125 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 $388,000 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

Date	Particulars	Debit	credit
Jan-02	Treasury stock	75000
	cash		75000
	(being purchase of 5000 shares at $15 cash)
Jan-05	Retained earnings
	Common dividend payable	100000
	(55000-5000)*$2 per share		100000
Feb-28	Common dividend payable	100000
	Cash		100000
	(being dividend paid)
Jul-06	Cash(1875 shares*19)	35625
	Treasury stock - common (1875 shares *15)		28125
	Paid in capital - common		7500
	(sold 1875 shares of treasury stock)
Aug-22	Cash (3125 shares * $12 per share)	37500
	Paid in capital, treasury stock	7500
	Retained earnings	1875
	Treasury stock - common (3125shars *$15)		46875
Sep-05	Retained earnings	110000
	Common dividend payable		110000
	Dividend declared 55000 shares outstanding at $2
Oct-28	Common dividend payable	110000
	Cash		110000
	(dividend paid)
Dec-31	Income summary	388000
	Retained earnings		388000

Statement of retained earnings
For the year ended
	$
Retained earnings,Dec 31	400000
Add: Net income	388000
Less: cash dividends	-210000
Less: treasury stock reissuance	-1875
Retained earnings, dec 31, 2019	576125

Kohler corporation
Stock holders' equity section of balance sheet
December 31 2019
	$
Common stock [$20 par value, 55000 shares]	1100000
Paid in capital in excess of par value, common stock	80000
Retained earnings	576125

Answer 2

How did y’all get less : cash divideds??