In late 2015, the Nicklaus Corporation was formed. The corporate charter authori

Question

In late 2015, 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, 2016, 4,000,000 shares of the common stock are issued in exchange for cash at an average price of $15 per share. Also on January 2, all 2,000,000 shares of preferred stock are issued at $20 per share.

Prepare journal entries to record these transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Prepare the shareholders' equity section of the Nicklaus balance sheet as of March 31, 2016. (Assume net income for the first quarter 2016 was $1,800,000.)

Prepare journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Prepare the Nicklaus Corporation shareholders' equity section as it would appear in a balance sheet prepared at September 30, 2016. (Assume net income for the second and third quarter was $3,300,000.)

On October 1, 2016, 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, 2016, the Nicklaus Corporation declares a $0.19 per share cash dividend on common stock and a $0.36 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2016, to shareholders of record on November 15, 2016.

    On December 2, 2016, the Nicklaus Corporation declares a 1% stock dividend payable on December 28, 2016, to shareholders of record on December 14. At the date of declaration, the common stock was selling in the open market at $15 per share. The dividend will result in 76,000 (0.01 × 7,600,000) additional shares being issued to shareholders.

Prepare journal entries to record the declaration and payment of these stock and cash dividends. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Prepare the December 31, 2016, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,800,000.)

Prepare a statement of shareholders' equity for Nicklaus Corporation for 2016. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)

In late 2015, 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, 2016, 4,000,000 shares of the common stock are issued in exchange for cash at an average price of $15 per share. Also on January 2, all 2,000,000 shares of preferred stock are issued at $20 per share.

Explanation / Answer

October 1.2016 Memorandum Entry: A 2:1 stock split increased the no.of shares O/s to 7600000 and reduced par value from $ 1 to $ 0.50 NO JOURNAL ENTRY REQD. Novemer 1. 2016 To record declaration of cash dividend on Common & Preferred stock Retained Earnings 2164000 Dividends payable on common stock(7600000*0.19) 1444000 Dividends payable on Preferred stock(2000000*0.36) 720000 December 1, 2016 Payment of Dividends Dividends payable on common stock(7600000*0.19) 1444000 Dividends payable on Preferred stock(2000000*0.36) 720000 Cash 2164000 December 2, 2016   (Declaration of stock dividend) Retained earnings(76000* $ 15) 1140000 Common stock dividend distributable(76000*0.5) 38000 Paid-in-capital in excess of par(76000*14.5) 1102000 December 28, 2016 Payment of Dividend Common stock dividend distributable(76000*0.5) 38000 Common stock 38000 The December 31, 2016, shareholders' equity section of the balance sheet for the Nicklaus Corporation Stock holders' Equity as on Dec.31 Common stock Authorised -12000000 Shares Issued          -8000000 Shares Outstanding 7676000 shares @ 0.50 Par value 3838000 Paid-in capital un excess of par 1102000 Total Paid-in capital 4940000 Retained Earnings- 7900000-2164000-1444000 4292000

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