Kohler Corporation reports the following components of stockholders’ equity on D
ID: 2511381 • Letter: K
Question
Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:
In year 2017, the following transactions affected its stockholders’ equity accounts.
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.
40,000 shares issued and outstanding $ 1,000,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 370,000 Total stockholders' equity $ 1,440,000
Explanation / Answer
Date
General Journal
Debit
Credit
Jan 01
Treasury stock, common
90000
Cash(4500 x 20)
90000
Jan 05
Retained earnings
155500
Common dividend payable(40000 x 4 - 4500)
155500
Feb 28
Common dividend payable
155500
Cash
155500
July 06
Cash(1688 x 24)
40512
Paid-in capital, treasury stock
1688
Treasury stock, common(1688 x 25)
42200
Aug 22
Cash(2812 x 17)
47804
Paid-in capital, treasury stock
1688
Retained earnings
20808
Treasury stock, common(2812 x 25)
70300
Sept 05
Retained earnings(40000 x 4)
160000
Common dividend payable
160000
Oct 28
Common dividend payable
160000
Cash
160000
Dec 31
Income summary
388000
Retained earnings
388000
2. Prepare a statement of retained earnings for the year ended December 31, 2017.
Retained earnings, December 31, 2017
$370000
Add: Net income
388000
758000
Less: Cash dividends declared
315500
Less: Treasury stock reissuances
20808
Retained earnings, December 31, 2017
$421692
3.
Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2017.
Common stock - $25 par value
$1000000
Paid-in capital in excess of par value, common stock
70000
Retained earnings
421692
Less: cost of treasury stock
10104
Total stockholders’ equity
$1481588
Date
General Journal
Debit
Credit
Jan 01
Treasury stock, common
90000
Cash(4500 x 20)
90000
Jan 05
Retained earnings
155500
Common dividend payable(40000 x 4 - 4500)
155500
Feb 28
Common dividend payable
155500
Cash
155500
July 06
Cash(1688 x 24)
40512
Paid-in capital, treasury stock
1688
Treasury stock, common(1688 x 25)
42200
Aug 22
Cash(2812 x 17)
47804
Paid-in capital, treasury stock
1688
Retained earnings
20808
Treasury stock, common(2812 x 25)
70300
Sept 05
Retained earnings(40000 x 4)
160000
Common dividend payable
160000
Oct 28
Common dividend payable
160000
Cash
160000
Dec 31
Income summary
388000
Retained earnings
388000
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