Question

Part C
On October 1, 2018, Nicklaus Corporation receives permission to replace its $1 par value common stock (4,000,000 shares authorized, 2,000,000 shares issued, and 1,900,000 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 $0.08 per share cash dividend on common stock and a $0.24 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 2% 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 (0.02 × 3,800,000) 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 the December 31, 2018, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,200,000.)
3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2018.

Answer 1

ofoch dividends Refainco carninq - 76000 x ei0 斗60,000 Comman Coh dvidend Retained earning/) harc 1901 ,000 x$0.08 ㄷ 304 000 e jeuanaleni as hocn belocs

DebiGedit dvidsn 30400o Declanationvividand pae Decdanahom 304000 ayidend payadle Payjmer Bo400O cc -el 304600 Retained earning tchdividend |tㅋ60,000 38000 CC-0 8000 - 38oc0 étvebddeb eh etin 1938000

Paid capitaliexce Retained canning aaoo,ooO_ 30yooo-7a000-38000 36000 Retained caznings 136000 Panticulan 938000 18 3000 Retained earningz 1136600 Jota 3 496000 Tr 3 Corporalion

еол end dec 31,2013 900,000 ch ос. Lie divides słoch civi 39000 | 700000 |-7 cnding balance01 938000 72000136000 3196000