Kohler Corporation reports the following components of stockholders’ equity on D
ID: 2593151 • Letter: K
Question
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.
Common stock—$20 par value, 100,000 shares authorized,55,000 shares issued and outstanding $ 1,100,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 400,000 Total stockholders' equity $ 1,570,000
Explanation / Answer
1 Preparation of journal Entries date Account & Explanation Debit Credit Jan-01 Treasury Stock (6000*$20) 120000 To Cash 120000 (being treasury stock purchased) Jan-05 Retained Earnings (49000*$6) 294000 To Dividend payables A/c 294000 (being Dividend Declared has been recorded) Feb-28 Dividends payable A/c 294000 To Cash 294000 (being Dividend paid has been recorded) Jul-06 Cash A/c (2250*$24) 54000 To Common Treasury stock 45000 To paid in capital on sale of treasury Stock 9000 (being sale of treasury stock has been recorded) Aug-22 Cash A/c (3750*$17) 63750 paid in capital on sale of treasury Stock 9000 Retained Earnings (75000-63750-9000) 2250 To Common Treasury stock 75000 (being sale of treasury stock has been recorded) Sep-05 Retained Earnings (55000*$6) 330000 To Dividend payables A/c 330000 (being Dividend Declared has been recorded) Oct-28 Dividends payable A/c 330000 To Cash 330000 (being Dividend paid has been recorded) Dec-31 Income Summary 408000 To retained earnings A/c 408000 (Being closing of Income Statement has been recorded) 2 Prepare a statement of retained earnings for the year ended December 31, 2017 Amount in $' Amount in $' retained Earnings dec31,2016 4,00,000 net income 408000 less: Dividends (294000+330,000) 624000 less: Sale of treasury stock 2250 -626250 Retained earnings dec31,2017 1,81,750 3Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2017 Amount in $' Common stock—$20 par value, 100,000 shares authorized 55,000 shares issued and outstanding 1100000 Contributed capital in excess of par value, common stock 70000 Retained earnings 181750 Total stockholders’ equity 1351750