In: Accounting
2. Kohler Corporation reports the following components of
stockholders’ equity on December 31, 2016:
Common stock—$15 par value, 100,000 shares
authorized, 45,000 shares issued and outstanding |
$675,000 |
Paid-in capital in excess of par value, common stock | 60,000 |
Retained earnings | 430,000 |
Total stockholders' equity | $1,165,000 |
In year 2017, the following transactions affected its stockholders’
equity accounts.
Jan. | 1 | Purchased 5,500 shares of its own stock at $15 cash per share. |
Jan. | 5 | Directors declared a $4 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 2,063 of its treasury shares at $19 cash per share. |
Aug. | 22 | Sold 3,437 of its treasury shares at $12 cash per share. |
Sept. | 5 | Directors declared a $4 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 $428,000 credit balance (from net income) in the Income Summary account to Retained Earnings. |
Required:
1. Prepare journal entries to record each of these
transactions 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.
1 | ||||
Date | General Journal | Debit | Credit | |
1-Jan | Treasury stock, Common | 82,500 | =5500*15 | |
Cash | 82,500 | |||
5-Jan | Retained earnings | 158,000 | =(45000-5500)*4 | |
Common dividend payable | 158,000 | |||
28-Feb | Common dividend payable | 158,000 | ||
Cash | 158,000 | |||
6-Jul | Cash | 39,197 | =2063*19 | |
Treasury stock, Common | 30,945 | =2063*15 | ||
Paid-in capital, Treasury stock | 8,252 | |||
22-Aug | Cash | 41,244 | =3437*12 | |
Paid-in capital, Treasury stock | 8,252 | |||
Retained earnings | 2,059 | |||
Treasury stock, Common | 51,555 | =3437*15 | ||
5-Sep | Retained earnings | 180,000 | =45000*4 | |
Common dividend payable | 180,000 | |||
28-Oct | Common dividend payable | 180,000 | ||
Cash | 180,000 | |||
31-Dec | Income summary | 428,000 | ||
Retained earnings | 428,000 | |||
2 | ||||
KOHLER CORPORATION | ||||
Statement of Retained Earnings | ||||
For Year Ended December 31, 2017 | ||||
Retained earnings, Dec. 31, 2016 | 430,000 | |||
Add: Net income | 428,000 | |||
858,000 | ||||
Less: Cash dividends declared | (338,000) | |||
Less: Treasury stock reissuances | (2,059) | |||
Retained earnings, Dec. 31, 2017 | 517,941 | |||
3 | ||||
KOHLER CORPORATION | ||||
Stockholders' Equity Section of the Balance Sheet | ||||
December 31, 2017 | ||||
Common stock - $15 par value | 675,000 | |||
Paid-in capital in excess of par value, common stock | 60,000 | |||
Total contributed capital | 735,000 | |||
Retained earnings | 517,941 | |||
Total stockholders' equity | 1,252,941 |