Question

Part A
In late 2017, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 6,000,000 shares of common stock carrying a $1 par value, and 2,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2018, 4,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also on January 2, all 2,000,000 shares of preferred stock are issued at $20 per share.

Required:
1. Prepare journal entries to record these transactions.
2. Prepare the shareholders' equity section of the Nicklaus balance sheet as of March 31, 2018. (Assume net income for the first quarter 2018 was $1,750,000.)

Part B
During 2018, the Nicklaus Corporation participated in three treasury stock transactions:

1. On June 30, 2018, the corporation reacquires 250,000 shares for the treasury at a price of $12 per share.
2. On July 31, 2018, 25,000 treasury shares are reissued at $15 per share.
3. On September 30, 2018, 25,000 treasury shares are reissued at $10 per share.

Required:
1. Prepare journal entries to record these transactions.
2. Prepare the Nicklaus Corporation shareholders' equity section as it would appear in a balance sheet prepared at September 30, 2018. (Assume net income for the second and third quarter was $3,250,000.)

Part C
On October 1, 2018, Nicklaus Corporation receives permission to replace its $1 par value common stock (6,000,000 shares authorized, 4,000,000 shares issued, and 3,800,000 shares outstanding) with a new common stock issue having a $.50 par value. Since the new par value is one-half the amount of the old, this represents a 2-for-1 stock split. That is, the shareholders will receive two shares of the $.50 par stock in exchange for each share of the $1 par stock they own. The $1 par stock will be collected and destroyed by the issuing corporation.

On November 1, 2018, the Nicklaus Corporation declares a $0.18 per share cash dividend on common stock and a $0.35 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2018, to shareholders of record on November 15, 2018.

On December 2, 2018, the Nicklaus Corporation declares a 1% stock dividend payable on December 28, 2018, to shareholders of record on December 14. At the date of declaration, the common stock was selling in the open market at $10 per share. The dividend will result in 76,000 (0.01 × 7,600,000) additional shares being issued to shareholders.

Required:
1. Prepare journal entries to record the declaration and payment of these stock and cash dividends.
2. Prepare December 31, 2018, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,750,000.)
3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2018.

Required 1 Part A Required 2 Part A Required 1 Part B Required 2 Part B Required 1 Part C Required 2 Part Required 3 Part C Prepare journal entries to record the declaration and payment of these stock and cash dividends. (If no entry is require transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 6 > Record the entry for the 2-for-1 stock split. Note: Enter debits before credits. General Journal Debit Credit Date October 01 Record entry Clear entry View general journal

****PLEASE ANSWER PART C ONLY!!!!!! Required 1, 2, and 3, for PART C*********

Answer 1

(4) Debit Credit (4) 40,000 000 4,000,000 36,000,000 340,000,000 1o,000,000 30,000,000 Ans Part A Date Queral Journal 2018 Cash_(42000.000X10) 2 Jan. Common stock (4,000,000xI) Paid up Value in excess of Par- Commonstock C 42000/000X.I) of common stock) 2 Jan.2018 Cash tomog000 $20) Balerred stock (2000, 2005) faid up Value in Excess of fare perferred stock (Roxeoxls) how of Preferred stock) Nicklaus Couponton Balance sheet (Partial Shareholder's Equity Sectiei ! • Sharhaldess' Equity Paid an capital Preferred Stock $19000,000 Commen Stock 4,000,000 Paid up vales in Excel - Espersed sf 30,000,000 Paid up Value in Encen-Common st. 36,000,000 Total Paid In Capital $80,000,000

Rebined Earnings $_1180,000 $ 81, 750,000 1. Part B. Date 30 June 2018 (9) Debi't 3000,000 Credit ) ) 3,000,000 31 July 375,000 2018 25,000 General fowenali Treasury Stack (asyuro $13) Cash (purchase of Irccasicey stock) Cash 125,000* $15) Jutsuy Slack 425,00 XAL) Paid up Value in Ences of Provany Stack (asoox.914) CRevisus of Treasusey Stock) Cesh (25,000X$lo) Treasury Stock Case X30 Paid up value in Euans of four- Deceasury stock (@5ccm x 49) tReissue of Treasury Stock) in of par 350,000 30 Sept. 2018 250,000 25.000 225,000

Nicklaus Corporation Balance sheet (Poseball Shareholders Equity Section Shanekoider! Speedy Paid in Capital Projerad Stock Lommon Stock laid up value in Excess foll up value in Excess of four - Common Stocks Lou'd up value in Excus parc Impelling stock (daromatis0,000) Total paid in Capital Retained cenubings 44750,000 +3,250,000) Total paid in Capital and retained Earnings Ixcosmy stock 43,000,000 – 504000) Total Shareholder's Equity of pare Beferored Stock I 1,000,000 - 4000,000 30,000,000 36,009.000 575,000 $ 80,575,000 $5,000,000 $ 85,575,000 2,950,000 $82, 625,000 Part C Gudit Date t Nov.2018 Delet 43,68,000 1,368,000 General Journal Dividends (3800,600X2X•18) Dividend Payable (Equity dividend arcounted) Dividend ( 2000/000x -36) Dindend Payable ( Resferred discend aclbumukall 300,000 700,000

2 Dec 2018 2. . I Dec.2018 Disidend Payable 2,068,000 Cash 22,068,000 (Dividend Paud) Stock Diblend 76,000 Common stock 76,000 (Stock dividend accounted) -Nicklaus Corporation lan Balance sheet (Partial) Ilareholders equity Section Shareholders 'Equity Poid - In-capital Proferred stock Common stock (4000,000+70,000 4,076,000 Pared up Value in Excess of past Preferoved Stock 30,000,000 Paid up value in Enows of far - Common stock 36,000,000 foi Value in Exceso para Jereasury Stock 575,000 Total Paid in Capital $ 80,637,000 Retained Earnings (1750000f350,000+2230,000–76.000 1,674,000 Total Paid in capital and retained earnings $ 48,325,000 Len Treasury stock -2,900,000 Total shareholders Equity 1 $ 85,375,000 $ 10,000/000 up

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