Question

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2017. 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 In year 2018, 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 February 28 to the February 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 October 28 to the September 25 stockholders of record. Oct. 28 Paid the dividend declared on September 5. Dec. 31 Closed the $388,000 credit balance (from net income) in the Income Summary account to Retained Earnings. Required: 1. Prepare journal entries to record each of these transactions for 2018. 2. Prepare a statement of retained earnings for the year ended December 31, 2018. 3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2018

Answer 1

Answer:

Explanation:

1.) Kindly check attached picture

2.) Statement of retained earning

Statement of Retained Earnings

For Year Ended December 31, 2018

Retained earnings, Dec. 31, 2017, 270,000

Add: Net income 388,000

Less: Cash dividends declared (152,000)

Less: Treasury stock reissuance (1,500)

Retained earnings, Dec. 31, 2018, 504,500

C.) Stockholders' Equity Section of the Balance Sheet

December 31, 2018

Common stock - $10 par value 400,000

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

Retained earnings 504,500