Question

Kohler Corporation reports the following components of stockholders' equity at December 31, 2018. Common stock-$20 par value, lee, 800 shares authorized, 55,eee shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $1,180,800 70,000 370,00 $1,540, eee During 2019, the following transactions affected its stockholders' equity accounts. Jan. Jan. Feb. July Aug. Sept. Oct. Dec. 2 Purchased 5,580 shares of its own stock at $15 cash per share. 5 Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record. 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 $2 per share cash dividend payable on October 28 to the September 25 stockholders of record. 28 Paid the dividend declared on September 5. 31 Closed the $488,888 credit balance (from net income) in the Income Summary account to Retained Earnings. Required: 1. Prepare journal entries to record each of these transactions 2. Prepare a statement of retained earnings for the year ended December 31, 2019. 3. Prepare the stockholders' equity section of the company's balance sheet as of December 31, 2019. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare journal entries to record each of these transactions. View transaction list Journal entry worksheet 2 3 4 5 6 7 8 Record the purchase of 5,500 shares of its own common stock for $15 cash per share. Note: Enter debits before credits. General Journal Debit Credit Date Jan 02 Record entry Clear entry View general journal

Answer 1

1.

Date	Account Titles and Explanation	Debit	Credit
Jan. 1	Treasury stock (5500 x $15)	82500
	Cash		82500
	(To record purchase of treasury stock)
Jan. 2	Retained earnings	99000
	Dividend payable [$2 x (55000 - 5500)]		99000
	(To record declaration of cash dividend)
Feb. 28	Dividend payable	99000
	Cash		99000
	(To record payment of cash dividend)
Jul. 6	Cash (2063 x $19)	39197
	Treasury stock (2063 x $15)		30945
	Paid-in capital-Treasury stock (2063 x $4)		8252
	(To record sale of treasury stock)
Aug. 22	Cash (3437 x $12)	41244
	Paid-in capital-Treasury stock	8252
	Retained earnings [(3437 x $3) - 8252]	2059
	Treasury stock (3437 x $15)		51555
	(To record sale of treasury stock)
Sep. 5	Retained earnings	110000
	Dividend payable ($2 x 55000)		110000
	(To record declaration of cash dividend)
Oct. 28	Dividend payable	110000
	Cash		110000
	(To record payment of cash dividend)
Dec. 31	Income summary	408000
	Retained earnings		408000
	(To close net income to retained earnings)

2.

KOHLER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2019
Balance, January 1, 2018	370000
Add: Net income for the year	408000
	778000
Less: Cash dividends	-209000
Less: Sale of treasury stock below cost	-2059
Balance, December 31, 2019	566941

3.

KOHLER CORPORATION
Stockholder' Equity Section of the Balance Sheet
December 31, 2019
Common stock-$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding	1100000
Paid-in capital in excess of par value, common stock	70000
Total contributed capital	1170000
Retained Earnings	566941
Total stockholders' equity	1736941