Question

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2015:

Common stock—$20 par value, 100,000 shares authorized, 45,000 shares issued and    outstanding	$	900,000
Paid-in capital in excess of par value, common stock		70,000
Retained earnings		370,000
Total stockholders’ equity	$	1,340,000

In year 2016, the following transactions affected its stockholders’ equity accounts.
Jan.	1		Purchased 4,500 shares of its own stock at $20 cash per share.
Jan.	5		Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record.
Feb.	28		Paid the dividend declared on January 5.
July	6		Sold 1,688 of its treasury shares at $24 cash per share.
Aug.	22		Sold 2,812 of its treasury shares at $17 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 $368,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2016. KOHLER CORPORATION Stockholders' Equity Section of the Balance Sheet December 31, 2016 Common stock - $20 par value $900,000 Paid-in capital in excess of par value, common stock 70,000 Total contributed capital 970,000 Retained earnings Total stockholders' equity $970,000

Answer 1

Kohler Corporation

Stockholders’ equity section of the company’s balance sheet as on December 31, 2016:

1. Shareholders’ Equity Section:

	Stockholders' Equity Section of the Balance Sheet
	31-Dec-16
Common Stock, 45,000 at $20 par value		$900,000
Paid-in Capital in excess of par value, Common		$70,000
Contributed Capital		$970,000
Retained Earnings		$394,316
Total Stockholders' Equity		$1,364,316

Workings: Statement of retained earnings for the year ended December 31, 2017: Statement of Retained Earnings for the year ended Dec 31, 2017 Retained Earnings, beginning balance $370,000 Add: Net Income $368,000 $738,000 Less: Cash dividends ($162,000 + $180,000) ($342,000) $396,000 Less: Treasury stock reissuances, (6,752 -8,436) ($1,684) Ending Balance $394,316 Cash dividends- Dividends declared on Jan 5 – Total shares issued = 45,000 Less: treasury stock = 4,500 Outstanding shares = 40,500 Dividend declared = $4 per share Cash dividend payable on Feb 28 = $4 x 40,500 = $162,000 Dividend declared on sept 5 – Outstanding shares on sept 5 – Outstanding shares on July 140,500 Add: treasury stock sold on July 6,1,688 Add: treasury stock sold on Aug 22,2,812 Total outstanding shares as on September 5= 45,000 Dividend payable = $4 x 45,000 = $180,000 Calculation of paid-up capital on treasury stock reissuances – Paid up capital on treasury stock sold on July 6 – Cost of treasury stock sold = $20 per share Sale value of treasury stock sold = $24 Paid-up capital on 1,688 treasury stock sold = 1,688 x ($24 -$20) = 1,688 x $4 = $6,752 Less: Paid-up capital on 2,812 treasury stock sold on Aug 22, - Cost of treasury stock = $20 Sale value of treasury stock = $17 Paid up capital of 2,812 shares = 2,812 x (20 -17) = 2,812 x 3 = 8,436