Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Kohler Corporation reports the following components of stockholders equity on De

ID: 2458460 • Letter: K

Question

Kohler Corporation reports the following components of stockholders equity on December 31, 2013:

Common Stock-$10 par value, 100,000 shares authorized, 40,000 shares issued

and outstanding………………………………………………………………………………………. $400,000

Paid-in capital in excess of par value, common stock…………………………………………….   $60,000

Retained Earnings ………………………………………………………………………………………………… $270,000

Total stockholders’ equity ……………………………………………………………………………………. $730,000

In the year 2014, the following transactions affected its stockholders equity accounts.

Jan 1.     Purchased 4,000 shares of its own stock at $20 cash per share

Jan 5.     Directors declared a $2 per share cash dividend payable on Feb. 28th to the Feb 5th stockholders                        of record.

Feb 28. Paid the dividend declared on January 5

July 6.    Sold 1,500 of its treasury shares at $24 cash per share

Aug 22. Sold 2,500 of its treasury shares at $17 cash per share

Sept 5. Directors declared a $2 per share cash dividend payable on October 28th to the September 25th 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.

Question:

Prepare a statement of retained earnings for the year ended December 31, 2014

              

Explanation / Answer

Kohler Corporation

Statement of Retained Earnings

for the year ended December 31, 2014

Retained Earnings on December 31, 2013 $270000 Purchase of own shares -$80000 Dividends declared (96000* 2) -$192000 Profit on sale of treasury stock (1500 * $4) $6000 Loss on sale of treasury stock (2500 *3) -$7500 Dividends declared (96000*$2) -$192000 Net income for the year $388000 Retained earnings as on December 31, 2014 $192500