Question

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016: Common stock—$20 par value, 100,000 shares authorized, 40,000 shares issued and outstanding $ 800,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 370,000 Total stockholders' equity $ 1,230,000 In year 2017, 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 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 $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 $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 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 4,500 shares of its own common stock for $20 cash per share. -Record the declaration of a cash dividend of $4 per share. -Record the payment of the cash dividend. -Record the reissue of 1,688 shares of the treasury stock for $24 cash per share. -Record the reissue of 2,812 shares of the treasury stock for $17 cash per share. - Record the declaration of a cash dividend of $4 per share. -Record the payment of the cash dividend. -Record the entry to close the income summary account having a credit balance of $408,000. -repare a statement of retained earnings for the year ended December 31, 2017. (Amounts to be deducted should be indicated by a minus sign.) -Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2017.

Answer 1

	40,000 shares issued and outstanding @$20	$    8,00,000.00
	Paid in capital excess of par	$        60,000.00
	Retained Earnings	$    3,70,000.00
	Total Stockholder's equity	$ 12,30,000.00
	Kohler Corporation
Date	General,Journal	Debit	Credit
01-Jan	Tresury Stock-Common	$        90,000.00
	To Cash		$     90,000.00
	(Being amount of purchased of 4500 own stock @$20 per share)
05-Jan	Retained Earnings(40000-4500)*$4	$    1,42,000.00
	To Dividend Distributable		$ 1,42,000.00
	(Being amount of dividend declared
28-Feb	Dividend Distributable	$    1,42,000.00
	To Cash		$ 1,42,000.00
	(Being amount of dividend paid)
06-Jul	Cash(1688*$24)	$        40,512.00
	To Treasury Stock(1688*$20)		$     33,760.00
	To Paid in capital excess of par(1688*$4)		$       6,752.00
	(Being amount of sale of 1688 treasury stock @$24 per share)
22-Aug	Cash(2812*$17)	$        47,804.00
	Paid in capital,Treasury stock	$          6,752.00
	Retained Earnings($56240-$47804-$6752)	$          1,684.00
	To Treasury Stock(2812*$20)		$     56,240.00
	(Being amount of sale of 2812 Treasury stock @$17)
05-Sep	Retained Earnings(40000*$4)	$    1,60,000.00
	To Dividend Distributable		$ 1,60,000.00
	(Being amount of dividend decared on 40000 shares @$4 per share)
28-Oct	Dividend distributable	$    1,60,000.00
	To Cash		$ 1,60,000.00
	(Being amount of dividend paid)
31st Dec	Income summary	$    4,08,000.00
	To Retained Earnings		$ 4,08,000.00
	(Being amount of retained earnings transferred to Income summary account)
	Kohler Corporation
	Statement of Retained Earnings
	For the year ended December 31st,2017
	Beginning Retained Earnings	$    3,70,000.00
	Add: Net Income	$    4,08,000.00
		$    7,78,000.00
	Less: Cash Dividend	$ -3,02,000.00
	Less: Reissuance of Treasury stock	$        -1,684.00
	Ending Retained Earnings	$    4,74,316.00
	Kohler Corporation
	Stockholder's Equity section of balance shaeet
	For the year ended december 31st,2017
	Common Stock (40000 shares @$10 per share)	$    8,00,000.00
	Paid in capital-excess of par value common stock	$        60,000.00
	Total contributed capital	$    8,60,000.00
	Retained Earnings	$    4,74,316.00
	Total Stockholder's equity	$ 13,34,316.00