Kohler Corporation reports the following components of stockholders’ equity on December 31, 2013: Common stock—$15 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 825,000 Paid-in capital in excess of par value, common stock 80,000 Retained earnings 430,000 Total stockholders’ equity $ 1,335,000 In year 2014, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 5,500 shares of its own stock at $20 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. July 6 Sold 2,063 of its treasury shares at $24 cash per share. Aug. 22 Sold 3,437 of its treasury shares at $17 cash per share. Sept. 5 Directors declared a $4 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 $408,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2013:

Common stock—$15 par value, 100,000 shares authorized, 55,000 shares issued and    outstanding	$	825,000
Paid-in capital in excess of par value, common stock		80,000
Retained earnings		430,000
Total stockholders’ equity	$	1,335,000

In year 2014, the following transactions affected its stockholders’ equity accounts.
Jan.	1		Purchased 5,500 shares of its own stock at $20 cash per share.
Jan.	5		Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record.
Feb.	28		Paid the dividend declared on January 5.
July	6		Sold 2,063 of its treasury shares at $24 cash per share.
Aug.	22		Sold 3,437 of its treasury shares at $17 cash per share.
Sept.	5		Directors declared a $4 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 $408,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

1. Prepare journal entries to record each of these transactions for 2014.

Explanation:

Jan.	1		Purchased treasury stock (5,500 × $20) = $110,000.
Jan.	5		Declared $4 dividend on 49,500 outstanding shares
July	6		Cash = (2,063 × $24) = $49,512.
			Treasury Stock, Common = (2,063 × $20) = $41,260.
			Paid-In Capital, Treasury Stock = (2,063 × $4) = $8,252.
Aug.	22		Cash = (3,437 × $17) = 58,429.
			Treasury Stock, Common = (3,437 × $20) = $68,740.
Sept.	5		Declared $4 dividend on 55,000 outstanding shares = $220,000.

2.

Prepare a statement of retained earnings for the year ended December 31, 2014. (Amounts to be deducted should be indicated by a minus sign.)

 

3.

Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2014.

 

Explanation:

Common stock ($15 par value, 100,000 shares authorized, 55,000 shares issued and outstanding) = $825,000

On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, the company's records show the following items and amounts.

Exercise 1-16 Preparing a balance sheet L.O. P2

On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, the company's records show the following items and amounts.

Cash	$	2,000		Cash dividends	$	3,360
Accounts receivable		19,000		Consulting fees earned		21,000
Office supplies		4,250		Rent expense		3,780
Land		36,000		Salaries expense		8,400
Office equipment		28,000		Telephone expense		660
Accounts payable		7,500		Miscellaneous expenses		680
Common stock		77,630

Using the above information prepare an October 31 balance sheet for Real Solutions. (Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.)

REAL SOLUTIONS Balance Sheet October 31
Assets
Cash	$ 2,000
Accounts receivable	19,000
Office supplies
Land
Office equipment
Total Assets	$ 89,250
Liabilities
Accounts payable	$ 7,500
Equity
Common stock	77,630
Retained earnings	4,120
Total equity	81,750
Total Liabilities and Equity	$ 89,250

Explanation:

REAL SOLUTIONS Income Statement For Month Ended October 31
Revenues:
Consulting fees earned				$	21,000
Expenses:
Salaries expense	$	8,400
Rent expense		3,780
Miscellaneous expenses		680
Telephone expense		660
Total expenses					13,520
Net income				$	7,480

REAL SOLUTIONS Statement of Retained Earnings For Month Ended October 31
Retained earnings, Oct. 1	$	0
Add: Net income		7,480
		7,480
Less: Cash dividends		3,360
Retained earnings, Oct. 31	$	4,120