Question

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

Common stock—$10 par value, 100,000 shares authorized, 50,000 shares issued and outstanding	$	500,000
Paid-in capital in excess of par value, common stock		70,000
Retained earnings		430,000
Total stockholders' equity	$	1,000,000

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

Jan.		2		Purchased 4,000 shares of its own stock at $25 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 1,500 of its treasury shares at $29 cash per share.
Aug.		22		Sold 2,500 of its treasury shares at $22 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 $368,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

* Need journal entry as well*

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Answer 1

Answer :-

Req1 :

Date	Account Titles	Debit	Credit
Jan.1	Treasury Stock A/c Dr	$100,000
	To Cash A/c		$100,000
	(To record of purchase of 4000 shares of own stock @ $25 per share)
Jan.5	Retained Earnings A/c Dr.	$276,000
	To Dividend Payable A/c		$276,000
	(To record of dividend payable to 46,000 (50,000 - 6000 share purchase) shares Common stockholders @ $6 per share)
Feb.28	Dividend Payable A/c Dr.	$276,000
	To Cash A/c		$276,000
	(To record of dividend paid)
July 6	Cash A/c Dr. ( 1,500 share × $29 per share)	$43,500
	To Treasury Stock A/c ( 1,500 × $25)		$37,500
	To Paid-In Capital, Treasury Stock A/c		$6,000
	(To record sale of 1,500 treasury shares @ $29 per share)
Aug 22	Cash A/c Dr. ( 2,500 share × $22 per share)	$55,000
	Paid in Capital, Treasury Stock A/c Dr.	$6,000
	Retained earnings A/c Dr. ($62,500- $55000 - $6000)	$1,500
	To Treasury Stock A/c ( 2,500 × $25)		$62,500
	(To record sale of 2500 treasury shares @ $22 per share)
Sept 5	Retained Earnings A/c Dr.	$300,000
	To Dividend Payable A/c		$300,000
	(To record of dividend payable to 50,000 shares Common stockholders @ $6 per share)
Oct 28	Dividend Payable A/c Dr.	$300,000
	To Cash A/c		$300,000
	(To record of dividend paid)
Dec 31	Income summary A/c. Dr.	$368,000
	To Retained earnings A/c		$368,000
	( To record transfer of net income to retained earnings)

Req 2 :

KOHLER CORPORATION
Statement of Rertained Earnings
Balance as on Dec.31,2018	$430,000
Add : Net Income	$368,000
	$798,000
Less :Dividend Declared ($276,000 + $300,000 )	$576,000
Less : Treasury stock	$1,500
Retained Earnings	$220,500

Req 4:-

KOHLER CORPORATION
Stockholders' Equity Section of the Balance Sheet
Common stock—$10 par value, 100,000 shares authorized, 50,000 shares issued and outstanding	$500,000
Paid-in capital in excess of par value, common stock	$70,000
Total Contribution capital	$570,000
Retained Earnings	$220,500
Total Stockholders Equity	$790,500