s the total paid-in capital at year-endstack at y e Book value per share of the

Question

s the total paid-in capital at year-endstack at y e Book value per share of the common stoc 5. What is th earnings equals $695,000? -2A s, treasury Kohler Corporation reports the following ment of g components of stockholders" equity on December 31, 2015: $400,000 . 60,000 .270,000 ..$730,000 ommon stock--$10 par value, 100,000 shares a 40,000 shares issued and outstanding . . . . . . Paid-in capital in excess of par value, common Retained earnings .. Total stockholders' equity stock In year 2016, the following transactions affected its stockholders Jan. 1 Purchased 4,000 shares of its own stock at $20 cash per sih 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 1,500 of its treasury shares at $24 cash per share. Aug. 22 Sold 2,500 of its treasury shares at $17 cash per share. Sept. 5 Directors declared a $2 per share cash dividend payable on o October 28 to the September 25 stockholders of record Oct. 28 Paid the dividend declared on September 5 Closed the $388,000 credit balance (from net income) in the Income tained Earnings Dec. 31 Summary account to Re-

Explanation / Answer

1. Journal entries to record each of these transactions for 2016.

Jan 01
DR Treasury stock, Common 80,000
CR Cash 80,000

Jan 05
DR Retained earnings 72,000
CR Common dividend payable 72,000

Feb 28
DR Common dividend payable 72,000
CR Cash 72,000

Jul 06
DR Cash 36,000
CR Treasury stock, Common 30,000
CR Paid-in capital, Treasury stock 6,000

Aug 22
DR Cash 42,500
DR Paid-in capital, Treasury stock 6,000
DR Retained earnings 1,500
CR Treasury stock, Common 50,000

Sep 05
DR Retained earnings 80,000
CR Common dividend payable 80,000

Oct 28
DR Common dividend payable 80,000
CR Cash 80,000

Dec 31
DR Income summary 388,000
CR Retained earnings 388,000

Explanation:
Jan. 1 Purchased treasury stock (4,000 × $20) = $80,000.

Jan. 5 Declared $2 dividend on 36,000 outstanding shares = $72,000

July 6 Cash = (1500 × $24) = $36,000.
Treasury Stock, Common = (1500 × $20) = $30,000.
Paid-In Capital, Treasury Stock = (1500 × $4) = $6,000.

Aug. 22 Cash = (2,500 × $17) = $42,500.
Treasury Stock, Common = (2,500 × $20) = $50,000.

Sept. 5 Declared $2 dividend on 40,000 outstanding shares = $80,000

2. Statement of Retained Earnings

For Year Ended December 31, 2016

Retained earnings, Dec. 31, 2015 270,000
Add: Net income 388,000
Less: Cash dividends declared (152,000)
Less: Treasury stock reissuances (1,500)
Retained earnings, Dec. 31, 2016 504,500

3. Stockholders' Equity Section of the Balance Sheet

December 31, 2016

Common stock - $10 par value 400,000
Paid-in capital in excess of par value, common stock 60,000
Retained earnings 504,500

Explanation:
Common stock ($10 par value, 100,000 shares authorized, 40,000 shares issued and outstanding) = $400,000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.