Question

Part A In late 2020, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 5,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2021, 3,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also on January 2, all 1,000,000 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, 2021. (Assume net income for the first quarter 2021 was $1,000,000.) Part B During 2021, the Nicklaus Corporation participated in three treasury stock transactions: a. On June 30, 2021, the corporation reacquires 200,000 shares for the treasury at a price of $12 per share. b. On July 31, 2021, 50,000 treasury shares are reissued at $15 per share. c. On September 30, 2021, 50,000 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, 2021. (Assume net income for the second and third quarter was $3,000,000.) Part C On October 1, 2021, Nicklaus Corporation receives permission to replace its $1 par value common stock (5,000,000 shares authorized, 3,000,000 shares issued, and 2,900,000 shares outstanding) with a new common stock issue having a $0.50 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 $0.50 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, 2021, the Nicklaus Corporation declares a $0.05 per share cash dividend on common stock and a $0.25 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2021, to shareholders of record on November 15, 2021. Page 1096 On December 2, 2021, the Nicklaus Corporation declares a 1% stock dividend payable on December 28, 2021, 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 58,000 (0.01 * 5,800,000) additional shares being issued to shareholders.
show all the work please.

Answer 1

NICKLAUS CORPORATION
Part A
Common stock authorized		5,000,000	shares
Common stock par value		$ 1.00
Preferred stock authorized		1,000,000	shares
Preferred stock par value		$ 5.00
Common stock issued for cash, 1/2/2011	3,000,000	shares
Common stock average price	$ 10.00	per share
Preferred stock issued, 1/2/2011	1,000,000	shares
Preferred stock price per share	$ 20.00
Part B
Stock reacquired, 6/30/2011	200,000	shares
Treasury stock cost per share	$ 12.00
Treasury stock reissued, 7/31/2011	50,000	shares
Treasury stock cost per share	$ 15.00
Treasury stock reissued, 9/30/2011	50,000	shares
Treasury stock cost per share	$ 10.00
Part C
Common stock new par value, 10/1/2011	$ 0.50
Common stock shares outstanding	2,900,000
Common stock dividend declared, 11/1/2011	$ 0.05	per share
Preferred stock dividend declared, 11/1/2011	$ 0.25	per share
Declared stock dividend payable, 12/2/2011	1%
Cost per share at declaration	$ 10.00
Additional shares issued		58,000
Net income for 4th quarter		$ 2,500,000

Debit Credit 30,000,000 e-Correct Part A, Requirement 1: General Journal Account January 2, 2011 Cash Common stock Paid-in capital - excess of par, common January 2, 2011 Cash Preferred stock Paid-in capital - excess of par, preferred 3,000,000 27,000,000 20,000,000 - Correct 5,000,000 15,000,000 Part A, Requirement 2: NICKLAUS CORPORATION Balance Sheet-Shareholders' Equity Section March 31, 2011 $ 5,000,000 Shareholders' equity Preferred stock, $5 par, authorized 1,000,000 shares, issued and outstanding 1,000,000 shares Common stock, $1 par, authorized 5,000,000 shares, issued and outstanding 3,000,000 shares Paid-in capital - excess of par Retained earnings Total shareholders' equity 3,000,000 42,000,000 1,000,000 $ 51,000,000 Correct

Part B, Requirement 1: NICKLAUS CORPORATION General Journal Debit Credit 2,400,000 2,400,000 - Correct 750,000 - Correct Account June 30, 2011 Treasury stock Cash July 31, 2011 Cash Treasury stock Paid-in capital - share repurchase September 30, 2011 Cash Paid-in capital - share repurchase Treasury stock 600,000 150,000 500,000 100,000 600,000 - Correct Part B, Requirement 2: NICKLAUS CORPORATION Balance Sheet-Shareholders' Equity Section September 30, 2011 $ 5,000,000 Shareholders' equity Preferred stock, $5 par, authorized 1,000,000 shares, issued and outstanding 1,000,000 shares Common stock, $1 par, authorized 5,000,000 shares, issued 3,000,000 shares, 2,900,000 shares outstanding Paid-in capital - excess of par Paid-in capital - share repurchase Retained earnings 3,000,000 42,000,000 50,000 4,000,000 $ 54,050,000 (1,200,000) $ 52,850,000 Correct Less: Treasury stock (200,000 shares at cost) Total shareholders' equity

Part C, Requirement 1: NICKLAUS CORPORATION General Journal Debit Credit 540,000 e-Correct 290,000 250,000 Account October 1, 2011 No entry November 1, 2011 Retained earnings Dividends payable - common Dividends payable - preferred November 15, 2011 No Entry December 1, 2011 Dividends payable - common Dividends payable - preferred Cash December 2, 2011 Retained earnings Common stock dividends distributable Paid-in capital - excess of par, common December 28, 2011 Common stock dividends distributable Common stock 290,000 250,000 540,000 - Correct! 580,000 29,000 551,000 e-Correct 29,000 29,000 - Correct Part C, Requirement 2: NICKLAUS CORPORATION Balance Sheet-Shareholders' Equity Section December 31, 2011 $ 5,000,000 Shareholders' equity Preferred stock, $5 par, authorized 1,000,000 shares, issued and outstanding 1,000,000 shares Common stock, $.50 par, authorized 10,000,000 shares, issued 6,058,000 shares, 5,858,000 shares outstanding Paid-in capital - excess of par Paid-in capital - share repurchase Retained earnings 3,029,000 42,551,000 50,000 5,380,000 $ 56,010,000 (1,200,000) $ 54,810,000 Correct Less: Treasury stock (100,000 shares at cost) Total shareholders' equity

Part C, Requirement 3: NICKLAUS CORPORATION Statement of Shareholders' Equity For the Year Ended December 31, 2011 ($ in 000s) Preferred Stock Common Stock Additional Paid-in Capital Retained Earnings Total Treasury Shareholders' Stock Equity 5,000 15,000 27,000 3,000 (2,400) 1,200 50 January 2, 2011 Issuance of preferred stock Issuance of common stock Purchase of treasury stock Sale of treasury stock Net income Common cash dividends Preferred cash dividends Stock dividend December 31, 2011 20,000 30,000 (2,400) 1,250 6,500 (290) (250) 6,500 (290) (250) (580) 5,380 Correct 29 3,029 Correct 5,000 Correct 551 42,601 Correct (1,200) 54,810 Correct Correct