ACCOUNTING

Question 4.

Kohler Corporation reports the following components of stock holders’ equity on December 31, 2008.

Common stock – $10par value, 100,00 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 2009, 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 Feb. 28 to the Feb. 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 summery account to Retained Earnings.

Required

1. Prepare journal entries to record each of these transactions for 2009

2. Prepare a statement of retained earnings for the year ended December 31, 2009.

3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2009.

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