In: Accounting
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.
During 2021, the Nicklaus Corporation participated in three treasury stock transactions:
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. (Please note
that treasury stock are not eligible for dividends)
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 $20 per share. The dividend will
result in 29,000 (0.01 × 2,900,000) additional shares being issued
to shareholders.
QUESTIONS:
1. Prepare journal entries to record these transactions.
2. Prepare the December 31, 2021, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for 2021 was $6,500,000.)
NICKLAUS CORPORATION |
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Balance Sheet - Shareholders' Equity Section |
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December 31, 2021 |
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Shareholders' equity |
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Preferred stock |
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Common stock |
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Paid-in capital—excess of par |
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Paid-in capital—share repurchase |
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Retained earnings |
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Less: Treasury stock |
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Total shareholders' equity |
ANSWER
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