Kohler Corporation reports the following components of stockholders\' equity on

Question

Kohler Corporation reports the following components of stockholders' equity on December 31, 2015 Common stock-$15 par value, 100,000 shares authorized, 50,000 shares issued and outstanding Pald-in capltal In excess of par value, common stock Retalned earnings Total stockholders' equity $ 750,000 60,000 430,000 $1,240,000 In year 2016, the following transactions affected its stockholders' equity accounts. Jan. 1 Purchased 4,500 shares of its own stock at $25 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record. Feb. 28 Pald the dividend declared on January 5. July 6 Sold 1,688 of Its treasury shares at $29 cash per share. Aug. 22 Sold 2,812 of its treasury shares at $22 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 Pald the dvidend declared on September 5 Dec. 31 Closed the $388,000 credit balance (from net Income) In the Income Summary account to Retalned Earnings.

Explanation / Answer

(1) Journal Entries for the year 2016 Date Account titles & Explanation Debit Credit a) Record the purchase of 4,500 shares of its own common stock for $25 cash per share Treasury Stock A/c (4500*$25) 112500         To cash 112500 (be9ing treasury stock purchased has been recorded) (b) Record the declaration of a cash dividend of $4 per share. Retained earnings A/c (50000-4500)*$4 182000          To Dividends payable A/ 182000 (being Dividend declared has been recorded) c) Record the payment of the cash dividend. Dividend payable A/c 182000        To Cash A/c 182000 (beoing Dividend paid has been recorded) d) Record the reissue of 1,688 shares of the treasury stock for $29 cash per share. cash A/c   (1688*$29) 48952        To treasury Stock (1688*25) 42200         To Additional paid in capital - treasury stock 6752 (being re issue of treasury stock has been recorded) (e) Record the reissue of 2,812 shares of the treasury stock for $22 cash per share. cash A/c (2812*$22) 61864 Additional paid in capital - treasury stock   6752 Retained earnings A/c (8436-6752) 1684          To treasury Stock A/c   (2812*$25) 70300 (being re issue of treasury stock has been recorded) f) Record the declaration of a cash dividend of $4 per share. Retained earnings A/c (50000*$4) 200000          To Dividends payable A/ 200000 (being Dividend declared has been recorded) g) Record the payment of the cash dividend. Dividend payable A/c 200000        To Cash A/c 200000 (beoing Dividend paid has been recorded) h) Record the entry to close the income summary account having a credit balance of $388,000. Income Summary A/c 388000            To Retained earnings A/ 388000 (Being income summary has been transferred to retained Earnings) (2)KOHLER CORPORATION Statement of retained Earnings For the Year end Dcember 31,2016 Amount in $ Beginning retained earnings 4,30,000 Add:Net income 388000 8,18,000 Less: Dividend Declared (182000+200000) 382000 less: Loss sale of treasury stock 1684 Ending retained earnings 4,34,316 3) Stock holders Equity Section KOHLER CORPORATION Stock holders Equity Section of the balance sheet Dcember 31,2016 Amount in $ Common Stock $15 par value,100,000 shares authorised , 50,000 shares issued and outstanding 750000 paid in capital in excess of par value 60000 Total Contributed Capital 810000 retained Earnings 4,34,316 Total Stock holders Equity 12,44,316

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