Kohler Corporation reports the following components of stockholders\' equity on
ID: 2520254 • Letter: K
Question
Kohler Corporation reports the following components of stockholders' equity on December 31, 2015 Common stock-$10 par value, 100,000 shares authorized, 40,000 shares $ 400,000 60,000 270,000 $ 730,000 issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity In year 2016, the following transactions affected its stockholders' equity accounts Jan. 1 Purchased 4,000 shares of its own stock at $20 cash per share Jan. 5 Directors declared a $2 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record Feb. 28 Paid the dividend declared on January5 Jul. 6 Sold 1,500 of its treasury shares at $24 cash per share Aug. 22 Sold 2,500 of its treasury shares at $17 cash per share Sep. 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record Oct. 28 Pa the dividend declared on September5 Dec. 31 Closed the $388,000 credit balance (from net income) in the Income Summary account to Retained Earnings General Journal General Ledger Statement of Stockholders Impact orn Equity Requirement Trial Balance RE Equity Prepare the Statement of Retained Earnings for Kohler Corporation for the year ended December 31, 2016 KOHLER CORPORATION Statement of Retained Earnings For Year Ended December 31, 2016Explanation / Answer
Kohler Corporation
Statement of Retained Earnings –
Kohler Corporation
Statement of Retained Earnings
for the year ended December 31, 2016
Retained Earnings, January 1, 2016
$270,000
Add: Net Income
$388,000
$658,000
Less: Cash dividend
($152,000)
Less: Treasury stock reissues
($1,500)
Retained Earnings, December, 31, 2016
$504,500
Workings –
Number of shares outstanding as on Feb 28 –
Total issued shares 40,000
Less: treasury stock (shares repurchased)4,000
Outstanding shares36,000
Dividend at $2 per share$72,000
Treasury stock purchase – 4,000 x $20 = $80,000
July 6 –
Sale of 1,500 treasury stock at $24 = $36,000
Cash Dr 36,000
Treasury stock, Common Cr $30,000 (1,500 x $20)
Paid-in Capital Treasury stock Cr $6,000
Number of shares outstanding = 36,000 + 1,500 = 37,500
Aug 22 –
Sale of 2,500 treasury stock at $17 per share = $42,500
Cash, Dr $42,500
Paid-in Capital, Treasury stock, Dr $7,500,
Treasury Stock, Common (2,500 x $20) Cr $50,000
Number of shares outstanding = 37,500 + 2,500 = 40,000
Paid-in capital, treasury stock (July 6) = $6,000
Less: paid-in capital, treasury stock (Aug 22) = -$7,500
Retained Earnings = $6,000 - $7,500 = $1,500
Dividends declared on Sept 5 –
$2 per share x 40,000 shares = $80,000
Hence, total cash dividends = $72,000 + $80,000 = $152,000
Kohler Corporation
Statement of Retained Earnings
for the year ended December 31, 2016
Retained Earnings, January 1, 2016
$270,000
Add: Net Income
$388,000
$658,000
Less: Cash dividend
($152,000)
Less: Treasury stock reissues
($1,500)
Retained Earnings, December, 31, 2016
$504,500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.