Answer:
1. See the attached excel file for the journal entries.
2. Ending balance of retained earning is $346,125
3.Total Stockholder's Equity is $1,616,125
Explanation:
1. Prepare journal entries to record each of these transactions.
Note: See the attached excel file for the journal entries.
The following are tge workings:
w.1: Treasury stock = $5,000 * $20 = $10,000
w.2: Dividend payable = (Issued and outstanding shares - Shares repurchase) * Dividend per share = (60,000 - 5,000) * $4 = 55,000 * $4 = $220,000
w.3: Cash = Number of shares sold * Selling price per share = 1,875 * $24 = $45,000
w.4 = Treasury stock = Number of shares sold * Treasury price per share = 1,875 * $20 = $37,500
w.5: Additional paid in capital = Number of shares sold * (Selling price per share - Treasury price per share) = 1,875 * ($24 - $20) = $7,500
w.6: Cash = Number of shares sold * Selling price per share = 3,125 * $17 = $53,125
w.7 = Treasury stock = Number of shares sold * Treasury price per share = 3,125 * $20 = $62,500
w.8: Balancing figure = Treasury stock (w.7) – Cash (w.7) - Additional paid in capital (w.5) = $62,500 - $53,125 - $7,500 = $1,875
w.9: Dividend payable = (Issued and outstanding shares * Dividend per share = 60,000 * $4 = $240,000
2. Prepare a statement of retained earnings for the year ended December 31, 2019.
Kohler Corporation
Statement of Retained Earnings
On December 31, 2019
<u>Particulars Amount ($) </u>
Opening balance 400,000
Income for the year 408,000
Dividend Paid (220,000 + 240,000) (460,000)
Loss on sale of treasury stock <u> (1,875) </u>
Ending balance <u> 346,125 </u>
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2019.
Kohler Corporation
Stockholder Equity Section of Balance sheet
At December 31, 2019
<u>Particulars Amount ($)</u>
Common stock issued ($20 * 60,000) 1,200,000
Paid-in capital in excess of par v - c. stock <u> 70,000 </u>
Total contributed Capital 1,270,000
Retained Earnings <u> 346,125 </u>
Total Stockholder's Equity <u> 1,616,125 </u>
