Question

Kohler Corporation reports the following components of stockholders' equity at December 31, 2018. Common stock-$15 par value, 180,0e0 shares authorized, 45,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings $ 675,000 80,000 400,000 $1,155,000 Total stockholders' equity ed During 2019, the following transactions affected its stockholders' equity accounts. 2 Purchased 5,000 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. 28 Paid the dividend declared on January 5. 6 Sold 1,875 of its treasury shares at $19 cash per share. nt Jan. Jan. Feb. July Aug. 22 Sold 3,125 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. Sept. 28 Paid the dividend declared on September 5 Oct. 31 Closed the $ 388,000 credit balance (from net incone) in the Income Summary account to Retained Earnings. Dec. 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 record each of these transactions Prepare journal entries

Answer 1

Solution:

1

Date	General Journal	Debit	Credit
2 Jan	Treasury stock , common	75,000		5,000 * 15
	cash		75,000
7 Jan	retained earning	25,000		(45,000 - 5,000)*4
	Common dividend payable		25,000
28 feb	Common dividend payable	25,000
	Cash		25,000
9 Jul	Cash	35,625		1,875 * 19
	Treasury stock , common		28,125	1,875*15
	Paid in capital , treasury stock		7,500
27 Aug	Cash	37,500		3,125*12
	Paid in capital , treasury stock	7,500
	Retained earnings	1,875
	Treasury stock, common		46,875	3,125*15
9 Sep	Retained earning	90,000		(45,000 -5,000 +1,875+3,125 )*2
	Common dividend payable		90,000
22 Oct	Common dividend payable	90,000
	Cash		90,000
31 Dec	Income summary	388,000
	Retained earnings		388,000

2)Statement of Retained earning for year ended December 31, 2019

Retained earnings December 31, 2018	400,000
Add: Net income	388,000
	788,000
Less: Cash dividends declared	(115,000)
Less: Treasury stock reissuances	(1,875)
Retained earnings, December 31, 2019	671,125

3) Stockholder's equity section of the balance sheet December 2019

Common stock	675,000
Paid in capital in excess of par value common stock	80,000
Retained earnings	671,125
Les: cost of treasury stock	(9,375)
Total Stockholder's equity	1,416,750

Answer 2

Hey, 

So the answer above this one is correct except that the equation they provided for "September 9th" is incorrect. To find the Retained Earning and Common Dividend Payable you need to multiply the number of shares issued and outstanding mentioned at the top by $4 (the per share cash dividend payable). That will give you a 180,000. Which is the answer. You will debit Retained Earnings and credit Common Dividend Payable. 

Hope this helps!

L