Kohler Corporation reports the following components of stock

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:

In year 2017, the following transactions affected its stockholders’ equity accounts.

Required:
1. Prepare journal entries to record each of these transactions for 2017.
2. Prepare a statement of retained earnings for the year ended December 31, 2017.
3. Prepare the stockholders\' equity section of the company’s balance sheet as of December 31, 2017.

Common stock—$25 par value, 100,000 shares authorized, 50,000 shares issued and outstanding	$	1,250,000
Paid-in capital in excess of par value, common stock		60,000
Retained earnings		430,000
Total stockholders\' equity	$	1,740,000

Solution

General Journal Date Account titles & Explanations Debit Credit 1-Jan Treasury Stock 75000 Cash (5000*15) 75,000 5-Jan Retained earnings 270000 Dividends payable 270,000 (50,000-5000)*6 28-Feb Dividends payable 270,000 cash 270,000 6-Jul Cash (1875*19) 35625 Treasury stock (1875*15) 28125 paid in capital in excess-TS 7500 22-Aug Cash (3,125*12) 37500 paid in capital in excess-TS 7,500 Retained earnings 1,875 Treasury stock (3125*15) 46875 5-Sep Retained earnings 300,000 Dividends payable 300,000 (50,000*6) 28-Oct Dividends payable 300,000 cash 300,000 31-Dec Income summary 388,000 Retained earnings 388,000 2) Retained Earnings Beginning balance ,Jan 1 430,000 Add:Net income 388,000 818,000 less:Cash dividend 570000 less:Treasury stock 1,875 Closing balance ,Dec 31 246,125 3) Stockholders Equity section common stock -$20 par value 1,250,000 paid in capital in excess of par value-CS 60,000 total contributed capital 1,310,000 Retained earnings 246,125 total stockholders Equity 1,556,125