Question

Kohler Corporation reports the following components of stockholders' equity on December 31, 2016: Common stock-$20 par value, 100,000 shares authorized, 45,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings $ 900,000 60,000 400,000 $1,360,000 Total stockholders' equity In year 2017, the following transactions affected its stockholders' equity accounts. 1 Purchased 5,500 shares of its own stock at $15 cash per share. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. Jan. Jan. 28 Paid the dividend declared on January 5. 6 Sold 2,063 of its treasury shares at $19 cash per share. 22 Sold 3,437 of its treasury shares at $12 cash per share. 5 Directors declared a $4 per share cash dividend payable on October 28 to the September 25 stockholders of record. She 44v4dend declared on September 5 Feb. July Aug. Sept. s m net income) in the Income Summary account to Retained Earnings. 31 Closed the 400,009 Dec. 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.

Answer 1

	Kohler Corporation
Date	General,Journal	Debit	Credit
01-Jan	Treasury Stock-Common	$        82,500.00
	To Cash		$     82,500.00
	( Amount of purchased of 5500 own stock @$15 per share)
05-Jan	Retained Earnings(45000-5500)*$4	$    1,58,000.00
	To Dividend distributable		$ 1,58,000.00
	( Amount of dividend declared
28-Feb	Dividend Distributable	$    1,58,000.00
	To Cash		$ 1,58,000.00
	( Amount of dividend paid)
06-Jul	Cash(2063*$19)	$        39,197.00
	To Treasury Stock(2063*$15)		$     30,945.00
	To Paid in capital excess of par(2063*$4)		$       8,252.00
	( Amount of sale of 2063 treasury stock @$19 per share)
22-Aug	Cash(3437*$12)	$        41,244.00
	Paid in capital,Treasury stock	$          8,252.00
	Retained Earnings($51555-41244-8252)	$          2,059.00
	To Treasury Stock(3437*$15)		$     51,555.00
	( Amount of sale of 3427 Treasury stock @$12)
05-Sep	Retained Earnings(45000*$4)	$    1,80,000.00
	To Dividend Distributable		$ 1,80,000.00
	( Amount of dividend declared on 45000 shares @$4 per share)
28-Oct	Dividend distributable	$    1,80,000.00
	To Cash		$ 1,80,000.00
	( Amount of dividend paid)
31st Dec	Income summary	$    4,08,000.00
	To Retained Earnings		$ 4,08,000.00
	( Amount of retained earnings transferred to Income summary account)
2)	Kohler Corporation
	Statement of Retained Earnings
	For the year ended December 31st,2017
	Beginning Retained Earnings	$    4,00,000.00
	Add: Net Income	$    4,08,000.00
		$    8,08,000.00
	Less: Cash Dividend($158000+180000)	$ -3,38,000.00
	Less: Re issuance of Treasury stock	$        -2,059.00
	Ending Retained Earnings	$    4,67,941.00
	Kohler Corporation
	Stockholder's Equity section of Balance Sheet
3)	For the year ended December 31st,2017
	Common Stock (45000 shares @$20 per share)	$    9,00,000.00
	Paid in capital-excess of par value common stock	$        60,000.00
	Total contributed capital	$    9,60,000.00
	Retained Earnings	$    4,67,941.00
	Total Stockholder's equity	$ 14,27,941.00