Kohler Corporation reports the following components of stockholders’ equity on D

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.

Journal Entries

1. Record the purchase of 6,000 shares of its own common stock for $20 cash per share.

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

3. Record the payment of the cash dividend.

4. Record the reissue of 2,250 shares of the treasury stock for $24 cash per share.

5. Record the reissue of 3,750 shares of the treasury stock for $17 cash per share.

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

7. Record the payment of the cash dividend.

8. Record the entry to close the income summary account having a credit balance of $428,000.

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

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

Common stock—$15 par value, 100,000 shares authorized,
55,000 shares issued and outstanding $ 825,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 460,000 Total stockholders' equity $ 1,355,000

Explanation / Answer

Answer 1 Answer 2 Journal Entries for 2017 A statement of retained earnings for the year ended December 31, 2017. Date Account Titles Debit Credit KOHLER CORPORATION Jan.1 Treasury Stock $120,000 Statement of Rertained Earnings Cash $120,000 For Year Ended December 31, 2017 (recording of purchase of 6000 shares of own stock @ $20 per share) Balance as on Dec.31,2016 $460,000 Add : Net Income $428,000 Jan.5 Retained Earnings $98,000 Less : Dividend Declared $208,000 Dividend Payable $98,000 Balance as on Dec.31,2017 $680,000 (recording of dividend payable to 49000 shares Common stockholders @ $2 per share) Answer 3 Feb.28 Dividend Payable $98,000 KOHLER CORPORATION Cash $98,000 Stockholders' Equity Section of the Balance Sheet (recording of dividend paid) December 31, 2017 Common stock—$15 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $825,000 July.6 Cash $54,000 Paid-in capital in excess of par value, common stock $67,750 Treasury Stock $45,000 Total Contributed Capital $892,750 Paid-in capital in excess of par value, Treasury stock $9,000 Retained Earnings $680,000 (recording sale of 2250 treasury shares @ $24 per share) Total Stockholders Equity $1,572,750 Aug.22 Cash $63,750 Paid-in capital in excess of par value, Treasury stock $9,000 Paid-in capital in excess of par value, Common stock $2,250 Treasury Stock $75,000 (recording sale of 2250 treasury shares @ $17 per share) Sept.5 Retained Earnings $110,000 Dividend Payable $110,000 (recording of dividend payable to 55000 shares Common stockholders @ $2 per share) Oct.28 Dividend Payable $110,000 Cash $110,000 (recording of dividend paid) Dec.31 Income Summary $428,000 Retained Earnings $428,000 (recording of transfer of net income to retained earnings)

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