Question

I only need part C completed

Part A
In late 2017, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 4,000,000 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, 2018, 2,000,000 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.

Required:
1. Prepare journal entries to record these transactions.
2. Prepare the shareholders' equity section of the Nicklaus balance sheet as of March 31, 2018. (Assume net income for the first quarter 2018 was $1,200,000.)

Part B
During 2018, the Nicklaus Corporation participated in three treasury stock transactions:

On June 30, 2018, the corporation reacquires 130,000 shares for the treasury at a price of $12 per share.

On July 31, 2018, 15,000 treasury shares are reissued at $15 per share.

On September 30, 2018, 15,000 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, 2018. (Assume net income for the second and third quarter was $2,650,000.)

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 $0.07 per share cash dividend on common stock and a $0.23 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 38,000 (0.01 × 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 $2,150,000.)
3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2018.

	prefer stock	common stock	paid in capital	retained earing	treasury stock	total shareholder equity
Jan 2 2018
issuance of preferred stock
issuance of common stock
purchase of treasury stock
sale of treasury stock
net income
common cash dividends
preferred cash dividends
stock dividend

Part A

1.

Date	General Journal	Debit	Credit
Jan. 2	Cash (2000000 x $10)	20000000
	Common stock (2000000 x $1)		2000000
	Additional paid-in capital -common stock		18000000
	(To record issuance of common stock)
Jan. 2	Cash (1000000 x $20)	20000000
	Preferred stock (1000000 x $5)		5000000
	Additional paid-in capital -preferred stock		15000000
	(To record issuance of preferred stock)

2.

NICKLAUS CORPORATION
Balance Sheet - Shareholders' Equity Section
March 31, 2018
Shareholders' Equity:
Preferred stock	5000000
Common stock	2000000
Additional paid-in capital	33000000
Retained earnings	1200000
Total stockholders' equity	41200000

Part B

1.

Date	General Journal	Debit	Credit
Jun. 30	Treasury stock (130000 x $12)	1560000
	Cash		1560000
	(To record purchase of treasury stock)
Jul. 31	Cash (15000 x $15)	225000
	Treasury stock (15000 x $12)		180000
	Additional paid-in capital from treasury stock		45000
	(To record sale of treasury stock)
Sep. 30	Cash (15000 x $10)	150000
	Additional paid-in capital from treasury stock	30000
	Treasury stock (15000 x $12)		180000
	(To record sale of treasury stock)

2.

NICKLAUS CORPORATION
Balance Sheet - Shareholders' Equity Section
September 30, 2018
Shareholders' Equity:
Preferred stock	5000000
Common stock	2000000
Additional paid-in capital	33000000
Additional paid-in capital from treasury stock	30000
Retained earnings	3850000
	43880000
Less: Treasury stock	1200000
Total stockholders' equity	42680000

Answer 1

Part C

1.

Date	Accout Titles  & Explanation	Debit	Credit
01-Oct	NO ENTRY
01-Nov	Retained earnings	$    4,96,000.00
	Dividends payable – common ($.07 x 1,900,000 x 2)		$2,66,000.00
	Dividends payable – preferred ($.23 x 1,000,000)		$2,30,000.00
15-Nov	NO ENTRY
01-Dec	Dividends payable – common	$    2,66,000.00
	Dividends payable – preferred	$    2,30,000.00
	Cash		$4,96,000.00
02-Dec	Retained earnings ($10 fair value x 38000 shares)	$    3,80,000.00
	Common stock dividends distributable ($.50 par x 38,000 shares)		$   19,000.00
	Paid-in capital – excess of par, common (difference)		$3,61,000.00
	1900000 x 2 x 1% shares = 38000 shares
28-Dec	Common stock dividends distributable	$       19,000.00
	Common stock		$   19,000.00

2.

NICKLAUS CORPORATION
Balance Sheet - Shareholders' Equity Section
September 30, 2018
Shareholders' Equity:
Preferred stock	$             50,00,000.00
Common stock	$             20,19,000.00
Additional paid-in capital	$          3,33,61,000.00
Additional paid-in capital from treasury stock	$                   15,000.00
Retained earnings	$             51,24,000.00
	$          4,55,19,000.00
Less: Treasury stock	$             12,00,000.00
Total stockholders' equity	$          4,43,19,000.00

3.

	prefer stock	common stock	paid in capital	retained earing	treasury stock	total shareholder equity
Jan 2 2018
issuance of preferred stock	$ 50,00,000.00		$ 1,50,00,000.00			$    2,00,00,000.00
issuance of common stock		$     20,00,000.00	$ 1,80,00,000.00			$    2,00,00,000.00
purchase of treasury stock					$ -15,60,000.00	$      -15,60,000.00
sale of treasury stock			$           15,000.00		$    3,60,000.00	$         3,75,000.00
net income				$        60,00,000.00		$       60,00,000.00
common cash dividends				$         -2,66,000.00		$        -2,66,000.00
preferred cash dividends				$         -2,30,000.00		$        -2,30,000.00
stock dividend		$          19,000.00	$       3,61,000.00	$         -3,80,000.00		$                           -
	$          50,00,000.00	$              20,19,000.00	$           3,33,76,000.00	$                   51,24,000.00	$         -12,00,000.00	$    4,43,19,000.00