JanJan2Purchased 4,000 shares of its own stock at $20 cash per share.Directors declared a $2 per share cash dividend payable on February 28 to the February 5stockholders of recordPaid the dividend declared on January 5Sold 1,500 of its treasury shares at $24 cash per shareSold 2,500 of its treasury shares at $17 cash per share5Feb. 28July 6Aug. 22Sep. 5 Directors declared a $2 per share cash dividend payableon October 28 to the September 25stockholders of recordPaid the dividend declared on September 5Closed the $388,000 credit balance (from net income) in the Income Summary account to Re-tained Earnings.Oct. 28Dec. 31Required1. Prepare journal entries to record each of these transactions2. Prepare a statement of retained earnings for the year ended December 31,2019Check (2) Ending retained earnings, $504,5003. Prepare the stockholders' equity section of the company's balance sheet as ofDecember 31, 2019.Page 493

Question
Asked Oct 6, 2019
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Kohler Corporation reports the following components of stockholders' equity at December 31,2018.

Common Stock- $10 par value, 100,000 shares authorized, 40,000 shares issued and outstanding $400,000

Paid-in capital in excess of par value, common stock 60,000

Retained Earnings 270,000

Total Stockholders' Equity $730,000

 

During 2019, the Following transactions affected its stockholders equity accounts.

 

 

Jan
Jan
2
Purchased 4,000 shares of its own stock at $20 cash per share.
Directors declared a $2 per share cash dividend payable on February 28 to the February 5
stockholders of record
Paid the dividend declared on January 5
Sold 1,500 of its treasury shares at $24 cash per share
Sold 2,500 of its treasury shares at $17 cash per share
5
Feb. 28
July 6
Aug. 22
Sep. 5 Directors declared a $2 per share cash dividend payable
on October 28 to the September 25
stockholders of record
Paid the dividend declared on September 5
Closed the $388,000 credit balance (from net income) in the Income Summary account to Re-
tained Earnings.
Oct. 28
Dec. 31
Required
1. Prepare journal entries to record each of these transactions
2. Prepare a statement of retained earnings for the year ended December 31,
2019
Check (2) Ending retained earnings, $504,500
3. Prepare the stockholders' equity section of the company's balance sheet as of
December 31, 2019.
Page 493
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Jan Jan 2 Purchased 4,000 shares of its own stock at $20 cash per share. Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record Paid the dividend declared on January 5 Sold 1,500 of its treasury shares at $24 cash per share Sold 2,500 of its treasury shares at $17 cash per share 5 Feb. 28 July 6 Aug. 22 Sep. 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record Paid the dividend declared on September 5 Closed the $388,000 credit balance (from net income) in the Income Summary account to Re- tained Earnings. Oct. 28 Dec. 31 Required 1. Prepare journal entries to record each of these transactions 2. Prepare a statement of retained earnings for the year ended December 31, 2019 Check (2) Ending retained earnings, $504,500 3. Prepare the stockholders' equity section of the company's balance sheet as of December 31, 2019. Page 493

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Expert Answer

Step 1

Journal Entries

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Journal entry in the books of Kohler Corporation Ref Debit Particulars Credit Date 01-Jan Treasury Stock A/c To Bank A/c Dr 80000 80000 (Being, issued common stock purchased) Jan-05 Retained Earnings A/c To Dividend Payable A/c (Being, Dividend declared) 72000 Dr 72000 Dividend Payable A/c Feb-28 Dr 72000 To Bank A/c 72000 (Being, Declared Dividends paid) Jul-06 Bank A/c Dr 36000 To Treasury Stock To Paid-in Capital Treasury 30000 6000 (Being, Re-sale of treasury stock)

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Step 2

Journal Entries - Continued

 

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Aug-22 Bank A/c Dr 42500 Paid-in Capital - Treasury A/c Dr 6000 Loss on issue of shares A/c 1500 Dr To Treasury Stock A/c 50000 (Being, Re-sale of treasury stock) Sep-05 Retained Earnings A/c Dr 80000 To Dividend Payable A/c 80000 (Being, Dividend Declared) Oct-28 Dividend Payable A/c To Bank A/c (Being, declared dividend paid) Dr 80000 80000 Income Summary A/c Dec-31 Dr 388000 To Retained Earnings A/c 388000 (Being, Net Income of the year transferred to Retained earnings a/c)

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Step 3

Statement of Retain...

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Computation of Statement of Retained Earnings Amount Amount Particulars Opening Bal 270000 Less: Dividend 72000 80000152000 Dividend Loss on issue of Treasury Stock -1500 Add: Current Year income 388000 Closing Bal 504500

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