Part C On October 1, 2018, Nicklaus Corporation receives permission to replace i

Question

Part C On October 1, 2018, 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 $.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 $0.11 per share cash dividend on common stock and a $0.28 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 58,000 (0.01 × 5,800,000) additional shares being issued to shareholders.

Prepare the December 31, 2018, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,350,000.)
3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2018.

Explanation / Answer

Givin below the journal entries. However question seems incomeplete (preferred stock not given), equity statement can not be completed:

1. Journal Entry Debit Credit Oct 1 No Entry Nov 1 Retained Earning 2340000 Dividend Payable-Common 660000 0.11*6000000 Dividend Payable-Preferred 1680000 0.28*6000000 Nov 15 No Entry Dec 1 Dividend Payable-Common 660000 0.11*6000000 Dividend Payable-Preferred (Assuming 6 million shares) 1680000 0.28*6000000 Cash 2340000 Dec 2 Retained Earning 580000 58000*10 Common stock dividend distruble 29000 58000*0.5 Paid in capital, excess at par, common 551000 Dec 28 Common stock dividend distruble 29000 Common Stock 29000

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