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Journal entries

Journal entries (where to debit/credit which account and why, why certain entries are adjusted because of activity in other accounts)

Problem 11-2A: Cash dividends, treasury stock, and statement of retained earnings L.O. C2, C4, P2, P5
Kohler Corporation reports the following components of stockholders' equity on December 31, 2008.

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 70,000
Retained earnings 370,000
Total stockholders' equity $ 1,690,000
In year 2009, the following transactions affected its stockholders' equity accounts:
Jan. 1 Purchased 6,000 shares of its own stock at $15 cash per share.
Jan. 5 Directors declared a $6 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 2,250 of its treasury shares at $19 cash per share.
Aug. 22 Sold 3,750 of its treasury shares at $12 cash per share.
Sept. 5 Directors declared a $6 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 $368,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

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Solution Summary

The solution explains the journal entries and how to prepare the stockholders equity section in the balance sheet.

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