Question

. Company	Annual Cash Dividend per Share				Market Value per Share
1	$	12.00			$	193.55
2		9.00				107.14
3		7.90				73.15
4		1.80				129.70

  
Compute the dividend yield for each of these four separate companies.

	Dividend Yield Company Choose Numerator: / Choose Denominator: = Dividend Yield Annual cash dividend per share / Market value per share = Dividend yield 1 $12.00 / $193.55 = 6.2% 2 9.00 / 107.14 = 8.4% 3 7.90 / 73.15 = 10.8% 4 1.80 / 129.70 = 1.4%

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:

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		60,000
Retained earnings		460,000
Total stockholders' equity	$	1,420,000

In year 2017, the following transactions affected its stockholders’ equity accounts.

Jan.		1		Purchased 5,000 shares of its own stock at $20 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 $24 cash per share.
Aug.		22		Sold 3,125 of its treasury shares at $17 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 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.

Record the purchase of 5,000 shares of its own common stock for $20 cash per share.

Record the declaration of a cash dividend of $2 per share.

Record the payment of a cash dividend.

Record the reissue of 1,875 shares of the treasury stock for $24 cash per share.

Record the reissue of 3,125 shares of the treasury stock for $17 cash per share.

Record the declaration of a cash dividend of $2 per share.

Record the payment of a cash dividend.

Record the entry to close the income summary account having a credit balance of $388,000.

Prepare a statement of retained earnings for the year ended December 31, 2017. (Amounts to be deducted should be indicated by a minus sign.)

	KOHLER CORPORATION Statement of Retained Earnings For Year Ended December 31, 2017 0 $0

Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2017.

	KOHLER CORPORATION Stockholders' Equity Section of the Balance Sheet December 31, 2017 Total contributed capital 0 Total stockholders' equity $0

Answer 1

Solution:

Problem --- Kohler Corporation

Part 1 --- Journal Entries

Date	General Journal	Debit	Credit
Jan.1	Treasury Stock (5000 Shares x $20)	$100,000
	Cash		$100,000
Jan.5	Retained Earnings	$80,000
	Dividend Payable (40,000 Shares x $2)		$80,000
	(Number of Shares Outstanding as on Jan.5 = 45,000 Shares beg - Treasury Stock 5000 = 40,000 shares)
Feb.28	Dividend Payable	$80,000
	Cash		$80,000
July.6	Cash (1875 Shares x 24)	$45,000
	Treasury Stock (1875 Shares x Cost $20)		$37,500
	Additional Paid in Capital from Treasury Stock (Bal. fig.)		$7,500
Aug.22	Cash (3125 Shares x $17)	$53,125
	Additional Paid in Capital from Treasury Stock	$7,500
	Retained Earnings (Bal. Fig)	$1,875
	Treasury Stock (3125 Shares x Cost $20)		$62,500
Sept.5	Retained Earnings	$90,000
	Dividend Payable (45,000 Shares x $2)		$90,000
	(Number of Shares Outstanding as on Sept.5 = 40,000 shares + 1875 + 3125 = 45,000 Shares)
Oct.28	Dividend Payable	$90,000
	Cash		$90,000
Dec.31	Income Summary	$388,000
	Retained Earnings		$388,000

Part 2 --- Statement of Retained Earnings

Retained Earnings Statement
December 31, 2018
Retained Earnings , January 1, 2017	$460,000
Add: Income for Year 2018	$388,000
	$848,000
Less: Treasury Stock adjustment	-$1,875
Less: Dividends Paid (80,000 + 90,000)	-$170,000
Retained Earnings, December 31, 2018	$676,125

Part 3 --- Stockholders Equity Section

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	$60,000
Total Contributed Capital	$960,000
Retained Earnings (as calculated in part 2)	$676,125
Total Stockholders’ Equity	$1,636,125

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