Question

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. 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	67,500		=4500*15
	Cash		67,500
5-Jan	Retained earnings	243,000		=(45000-4500)*6
	Common dividend payable		243,000
28-Feb	Common dividend payable	243,000
	Cash		243,000
6-Jul	Cash	32,072		=1688*19
	Treasury stock, Common		25,320	=1688*15
	Paid-in capital, Treasury stock		6,752
22-Aug	Cash	33,744		=2812*12
	Paid-in capital, Treasury stock	6,752
	Retained earnings	1,684
	Treasury stock, Common		42,180	=2812*15
5-Sep	Retained earnings	270,000		=45000*6
	Common dividend payable		270,000
28-Oct	Common dividend payable	270,000
	Cash		270,000
31-Dec	Income summary	408,000
	Retained earnings		408,000
2
	KOHLER CORPORATION
	Statement of Retained Earnings
	For Year Ended December 31, 2019
	Beginning Retained earnings	430,000
	Add: Net income	408,000
		838,000
	Less: Cash dividends declared	-513,000
	Less: Treasury stock reissuances	-1,684
	Ending Retained earnings	323,316
3
	KOHLER CORPORATION
	Stockholders' Equity Section of the Balance Sheet
	December 31, 2019
	Common stock - $25 par value	1,125,000
	Paid-in capital in excess of par value, common stock	60,000
	Total contributed capital	1,185,000
	Retained earnings	323,316
	Total stockholders' equity	1,508,316