Kohler Corporation reports the following components of stockholders’ equity on December 31, 2013 — Common stock par value 100 000 shares authorized

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

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 2014, 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.

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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.

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

2. Prepare a statement of retained earnings for the year ended December 31, 2014.

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

Part 1

Jan. 1	Treasury Stock, Common	80,000	80,000	80,000
	Cash				80,000
	Purchased treasury stock (4,000 x $20).
Jan. 5	Retained Earnings	72,000	72,000	72,000
	Common Dividend Payable				72,000
	Declared $2 dividend on 36,000 outstanding shares.	Declared $2 dividend on 36,000 outstanding shares.
Feb. 28	Common Dividend Payable	72,000	72,000	72,000
	Cash				72,000
	Paid cash dividend.
July 6	Cash*	36,000	36,000	36,000
	Treasury Stock, Common**				30,000
	Paid-In Capital, Treasury Stock***				6,000
	Reissued treasury stock. (1,500 x $24) (1,500 x $20) **(1,500 x $4)
Aug. 22	Cash*	42,500	42,500	42,500
	Paid-In Capital, Treasury Stock	6,000	6,000	6,000
	Retained Earnings	1,500	1,500	1,500
	Treasury Stock, Common**				50,000
	Reissued treasury stock. (2,500 x $17) *(2,500 x $20)
Sept. 5	Retained Earnings	80,000	80,000	80,000
	Common Dividend Payable				80,000
	Declared $2 dividend on 40,000 outstanding shares.	Declared $2 dividend on 40,000 outstanding shares.	Declared $2 dividend on 40,000 outstanding shares.
Oct. 28	Common Dividend Payable	80,000	80,000	80,000
	Cash				80,000
	Paid cash dividend.
Dec. 31	Income Summary	388,000	388,000	388,000
	Retained Earnings				388,000
	Closed Income Summary account.
Part 2

Kohler CORPORATION Statement of Retained Earnings For Year Ended December 31, 2014
Retained earnings, December 31, 2013	$270,000
Plus net income	388,000
	658,000
Less: Cash dividends declared	(152,000)
Treasury stock reissuances	(1,500)
Retained earnings, December 31, 2014	$504,500

Part 3

Kohler CORPORATION Stockholders’ Equity Section of the Balance Sheet December 31, 2014
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 (from part 2)	504,500
Total stockholders’ equity	$964,500