Kohler Corporation reports the following components of stockholders’ equity on D
ID: 2418774 • Letter: K
Question
Kohler Corporation reports the following components of stockholders’ equity on December 31, 2013:
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 400,000
Total stockholders’ equity $ 1,370,000
In year 2014, the following transactions affected its stockholders’ equity accounts.
Jan. 1 Purchased 5,500 shares of its own stock at $20 cash per share.
Jan. 5 Directors declared a $6 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 2,063 of its treasury shares at $24 cash per share.
Aug. 22 Sold 3,437 of its treasury shares at $17 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 $428,000 credit balance (from net income) in the Income Summary account to Retained Earnings.
Prepare journal entries to record each of these transactions for 2014
Prepare a statement of retained earnings for the year ended December 31, 2014.
Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2014.
Prepare journal entries to record each of these transactions for 2014
Prepare a statement of retained earnings for the year ended December 31, 2014.
Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2014.
Explanation / Answer
Jan 1 Treasury stock $110,000
cash $110,000
Feb 5 Dividend $6*39,500 $237,000
Dividend payable $237,000
feb 28 Dividend payable $237,000
cash $237,000
July 6 cash 2063*24 $49,512
treasury stock 2063*20 $41,260
paid in capital treasury $8,252
Aug 22 Cash 3437 * 17 $58,429
Paid in capital treasury $8,252
retained earnings $2,059
treasury stock $68,740
Sept 5 Dividend 45,000*6 $270,000
Dividend payable $270,000
Oct 28 Dividend payable $270,000
Cash $270,000
2. statement of retained earnings for year ended december 31,2014
Beginning retained earnings $400,000
Add net income $428,000
less dividend paid $507,000
less treasury stock $2,059
Ending retained earnings $318,941
3. Stock holders equity
Common stock -$20 par value , 100,000 authorised share , 45,000 shares issued and outstanding
$900,000
paid in capital in excess $70,000
Retained earnings $318,941
Total stock holders equity $1,288,941
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