Kohler Corporation reports the following components of stockholders equity at December 31 of the prior year.
During the current year, the following transactions affected its stockholders equity accounts.
Required: 1. Prepare journal entries to record each of these transactions. 2. Prepare a statement of retained earnings for the current year ended December 31. 3. Prepare the stockholders equity section of the balance sheet as of December 31 of the current year.
Common stock-$20 par value, 100,000 shares authorized, 50,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 1,000,000 70,000 370,000 $ 1,440,000 January 2 January 5 February 28 July 6 August 22 September 5 October 28 December 31 Purchased 6,000 shares of its own stock at $20 cash per share. Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. Paid the dividend declared on January 5. Sold 2,250 of its treasury shares at $24 cash per share. Sold 3,750 of its treasury shares at $16 cash per share. Directors declared a $4 per share cash dividend payable on October 28 to the September 25 stockholders of record. Paid the dividend declared on September 5. Closed the $408,000 credit balance (from net income) in the Income Summary account to Retained Earnings. Journal entry worksheet Record the purchase of 6,000 shares of its own common stock for $20 cash per share. Note: Enter debits before credits. Credit Date General Journal January 02 Treasury stock, Common Cash Debit 120,000 120,000 Record entry Clear entry View general journal KOHLER CORPORATION Statement of Retained Earnings For Current Year Ended December 31 Retained earnings, December 31, prior year Add: Net income Less: Cash dividends declared Retained earnings, December 31, current year 408,000 $ 408,000 KOHLER CORPORATION Stockholders' Equity Section of the Balance Sheet December 31 Total contributed capital 0 Total stockholders' equity $ 0 Identify which of the following statements are true for the corporate form of organization. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Shareholders are not personally liable for corporate acts. The sale of shares from one stockholder to another does not impact operations. An exception is when it changes the makeup of directors. The president and vice presidents choose the board of directors. Stockholders do not have the power to bind the corporation to contracts. Corporations are often subject to fewer regulations than partnerships. It is a separate legal entity. Stockholders are expected to hire and fire key executives
