Question

Kohler Corporation reports the following components of stockholders' equity on December 31, 2016: Conmon stock-$25 par value, 18e,000 shares authorized, 45,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings $1,125,0ee e00'e9 ee0'ert points Total stockholders equity ee0'ST9'IS In year 2017, the following transactions affected its stockholders' equity accounts. Jan. 1 Purchased 4,see shares of its own stock at $25 cash per share. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. "uec 28 Paid the dividend declared on January 5. 1 Feb. July 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. Dec. 31 Closed the $428,eee credit balance (fron net incone) in the Incone Sunmary account to Retained Earnings. 6 Sold 1,688 of its treasury shares at $29 cash per share. 28 Paid the dividend declared on September 5 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 Décember 31, 2017 Complete this question by entering your answers in the tabs below. T painba Required 2 Required 3 Prepare journal entries to record each of these transactions for 2017. View transaction list

Answer 1

Solution 1:

Kohler Corporation - Journal Entries
Date	Particulars	Debit	Credit
1-Jan	Treasury Stock A/c Dr	$112,500.00
	To Cash		$112,500.00
	(Being 4500 shares of treasury stock purchased at $25 per share)
5-Jan	Retained Earnings Dr	$162,000.00
	To Dividend payable [(45000 - 4500)*4]		$162,000.00
	(Being dividend declared)
28-Feb	Dividend Payable Dr	$162,000.00
	To Cash		$162,000.00
	(Being dividend paid)
6-Jul	Cash A/c Dr (1688*29)	$48,952.00
	To Treasury Stock (1688*25)		$42,200.00
	To Additional Paid in Capital (2250*$4)		$6,752.00
	(Being 1688 shares of treasury stock sold at $29 per share)
22-Aug	Cash A/c Dr (2812*22)	$61,864.00
	Additional Paid in Capital A/c Dr	$6,752.00
	Retained Earnings Dr (Balancing figure)	$1,684.00
	To Treasury Stock (2812*$25)		$70,300.00
	(Being 2812 shares of treasury stock sold at $22 per share)
5-Sep	Retained Earnings Dr	$180,000.00
	To Dividend payable (45000*4)		$180,000.00
	(Being dividend declared)
28-Oct	Dividend Payable Dr	$180,000.00
	To Cash		$180,000.00
	(Being dividend paid)
31-Dec	Income summary Dr	$428,000.00
	To Retained Earnings		$428,000.00
	(Being income transferred to retained earnings)

Solution 2:

Kohler Corporation - Statement of Retained Earnings on 31.12.2016
Particulars	Amount
Opening balance	$430,000.00
Add: Income for 2016	$428,000.00
	$858,000.00
Less: Dividend Paid (40500*$5 + 45000*$4)	$342,000.00
Less: Loss on sale of treasury stock	$1,684.00
Ending balance of Retained Earnings	$514,316.00

Solution 3:

Stockholder Equity Section of Balance sheet
Kohler Corporation at December 31, 2016
Particulars	Amount
Stockholders Equity:
Common stock—$25 par value, 100,000 shares authorized, 45,000 shares issued and outstanding	$1,125,000.00
Paid-in capital in excess of par value, common stock	$60,000.00
Total contributed Capital	$1,185,000.00
Retained Earnings	$514,316.00
Total Stockholder's Equity	$1,699,316.00