Problem 11-2A Cash dividends, treasury stock, and statement of retained earnings
ID: 2512808 • Letter: P
Question
Problem 11-2A Cash dividends, treasury stock, and statement of retained earnings LO C3, P2, P3
Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:
In year 2017, the following transactions affected its stockholders’ equity accounts.
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.
40,000 shares issued and outstanding $ 1,000,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 370,000 Total stockholders' equity $ 1,440,000
Explanation / Answer
KOHLER CORPORATION General journal for the year ended Dec.31,2017 Date Account Title Debit Credit Jan.1 Treasury Stock 90000 Cash 90000 (Purchase of 4,500 shares of own stock @$20 per share) Jan.5 Dividend 142000 Dividend Payable 142000 (Cash dividend on 35,500 shares @$4 per share) Feb.28 Dividend Payable 142000 Cash 142000 (Cash dividend decleared on Ja.5 paid) July.6 Cash 40032 Treasury Stock 33360 Paid-in-capital in excess of par, common stock 6672 (Sale of 1,688 shares of treasry stock @$24 per share) Aug.22 Cash 47804 Paid-in-capital in excess of par, common stock 8436 Treasury Stock 56240 (Sale of 2,812 shares of treasry stock @$17 per share) Sept.5 Dividend 160000 Dividend Payable 160000 (Cash dividend on 40,000 shares @$4 per share) Oct.28 Dividend Payable 160000 Cash 160000 (Payment of cadh dividend declared on Sept.5) Dec.31 Income Summary 388000 Retained Earnings 388000 (Closing of income sumaryto retained earnings) Dec.31 Retained Earnings 302000 Dividend 302000 (Closing of dividend account to retained earnings) KOHLER CORPORATION Statement of Retained Earnings for the year ended December 31, 2017 Balance as at January 1, 2017 370000 Net income for the year 388000 Dividend paid during the year -302000 Balance as at December 31, 2017 456000 KOHLER CORPORATION Balance Sheet (partial) Stockhloders' equity section Paid up capital Common stock, $25 par , 100,000 shares authorised 1000000 40,000 shares issued and outstanding Paid -in-capital inexcess of par value, common stock 68236 Retained earnings 456000 Total Stockholders' equity 1524236