Question

I HAVE ALREADY CORRECTLY COMPLETED PART A AND B PLEASE COMPLETE PART C ONLY

Part A
In late 2020, 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, 2021, 4,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also on January 2, all 2,000,000 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 $1,750,000.)

Part B
During 2021, the Nicklaus Corporation participated in three treasury stock transactions:

1. On June 30, 2021, the corporation reacquires 250,000 shares for the treasury at a price of $12 per share.
2. On July 31, 2021, 25,000 treasury shares are reissued at $15 per share.
3. On September 30, 2021, 25,000 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 $3,250,000.)

Part C

On October 1, 2021, 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 $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 $0.18 per share cash dividend on common stock and a $0.35 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2021, to shareholders of record on November 15, 2021.

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 the declaration, the common stock was selling in the open market at $10 per share. The dividend will result in 76,000 (0.01 × 7,600,000) 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, 2021, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,750,000.)
3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2021.

I HAVE ALREADY CORRECTLY COMPLETED PART A AND B PLEASE COMPLETE PART C ONLY PLEASE

Answer 1

Part c
Requirement 1
Date	Accout Titles  & Explanation	Debit	Credit
1-Oct	NO ENTRY
1-Nov	Retained earnings	2,068,000
	Dividends payable – common ($.18 x 3,800,000 x 2)		1,368,000
	Dividends payable – preferred ($.35 x 2,000,000)		700,000
15-Nov	NO ENTRY
1-Dec	Dividends payable – common	1,368,000
	Dividends payable – preferred	700,000
	Cash		2,068,000
2-Dec	Retained earnings ($10 fair value x 76000 shares)	760,000
	Common stock dividends distributable ($.50 par x 76,000 shares)		38,000
	Paid-in capital – excess of par, common (difference)		722,000
28-Dec	Common stock dividends distributable	38,000
	Common stock		38,000
Requirement 2
Nicklaus Corporation
Balance Sheet-Shareholders' Equity Section
31-Dec-21
Shareholders' equity
Preferred stock, $5 par, authorized 2,000,000 shares, issued and outstanding 2,000,000 shares	$                                                                     10,000,000.00
Common stock, $.50 par, authorized 12,000,000 shares, issued 8076000 (b)  shares and 7676000 (a) shares outstanding	$                                                                       4,038,000.00
Paid-in capital – excess of par ( c )	$                                                                     66,722,000.00
Paid-in capital—share repurchase (d)	$                                                                            25,000.00
Retained earnings ( e)	$                                                                       4,922,000.00
	$                                                                     85,707,000.00
Less: Treasury stock (200,000 shares at cost)	$                                                                     (2,400,000.00)
Total shareholders' equity	$                                                                     83,307,000.00
a) (3800,000 x 2 ) x 76000	$                                                                       7,676,000.00
b) 4,000,000 x 2 + 76000	$                                                                       8,076,000.00
c) (4000000 x 9)+(2000000 x 15) + 722,000	$                                                                     66,722,000.00
d) (25000 x (15 -12) + 25000 x (10-12)	$                                                                            25,000.00
e) 1750000+3250000 - 2068000 - 760000 + $2,750,000	$                                                                       4,922,000.00
c)
Nicklaus Corporation
Statement of Shareholders’ Equity
For the Year Ended Dec. 31, 2021
($ in 000s)
	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock (at cost)	Total Shareholders’ Equity
Jan 2 2018
issuance of preferred stock	10,000,000.00		30,000,000.00			40,000,000.00
issuance of common stock		4,000,000.00	36,000,000.00			40,000,000.00
purchase of treasury stock					-3,000,000.00	-3,000,000.00
Sale of treasury stock (a)			75,000.00		300,000.00	375,000.00
Sale of treasury stock (b)			-50,000.00		300,000.00	250,000.00
Net Income				7750000		7,750,000.00
common cash dividends				-1368000		-1,368,000.00
preferred cash dividends				-700000		-700,000.00
stock dividend		38,000	722,000	(760,000)		-
Total	10,000,000.00	4,038,000.00	66,747,000.00	4,922,000.00	-2,400,000.00	83,307,000.00