Kohler Corporation reports the following components of stockholders’ equity on D

Question

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2015: 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 In year 2016, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 4,500 shares of its own stock at $25 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. July 6 Sold 1,688 of its treasury shares at $29 cash per share. Aug. 22 Sold 2,812 of its treasury shares at $22 cash per share. Sept. 5 Directors declared a $4 per share cash dividend payable on October 28 to the September 25 stockholders of record. Oct. 28 Paid the dividend declared on September 5. Dec. 31 Closed the $408,000 credit balance (from net income) in the Income Summary account to Retained Earnings.Record the purchase of 4,500 shares of its own common stock for $25 cash per share. Record the payment of the cash dividend. Prepare a statement of retained earnings for the year ended December 31, 2016.

Explanation / Answer

Journal Entry or Record of each transaction:

Date Account Title & Explaination Debit Credit Jan 1 Treasury Stock (4500*25) 112500 Cash 112500 Jan. 5 Retained Earning (4*(55000-4500)) 202000 Dividend Payable 202000 Feb. 28 Dividend Payable 202000 Cash 202000 July 6 Cash 48952 Additional Paid in capital (1688*4) 6752 Treasury Stock (1688*25) 42200 Aug. 22 Cash 61864 Additional Paid in capital 6752 Retained Earning 1684 Treasury Stock (2812*25) 70300 Sept. 5 Retained Earning (4*55000) 220000 Dividend Payable 220000 Oct. 28 Dividend Payable 220000 Cash 220000 Dec 31 Income Summary 408000 Retained Earning 408000

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