Part A
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 $30 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 $1,400,000.)

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

1. On June 30, 2021, the corporation reacquires 170,000 shares for the treasury at a price of $12 per share.
2. On July 31, 2021, 35,000 treasury shares are reissued at $15 per share.
3. On September 30, 2021, 35,000 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 $2,850,000.)

Part C
On October 1, 2021, 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 $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 $0.11 per share cash dividend on common stock and a $0.28 per share cash dividend on preferred stock. Payment is scheduled for December 1, 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 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.

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 $2,350,000.)
3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2021.

The company sells many styles of earrings, but all are sold for the same price—$11 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $4.10 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $16,500 in new equipment during May and $41,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,750 each quarter, payable in the first month of the following quarter.

The company’s balance sheet as of March 31 is given below:

The company maintains a minimum cash balance of $51,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

The company has an agreement with a bank that allows the company to borrow at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible while still retaining at least $51,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

1. Budget assumptions for the year.

2. A sales budget, by month and in total.

3. A schedule of expected cash collections, by month and in total.

4. A merchandise purchases budget in units and in dollars. Show the budget by month and in

            total.

Part A In late 2017, 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, 2018, 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 $25 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 $1,900,000.) Part B During 2018, the Nicklaus Corporation participated in three treasury stock transactions: On June 30, 2018, the corporation reacquires 280,000 shares for the treasury at a price of $12 per share. On July 31, 2018, 40,000 treasury shares are reissued at $15 per share. On September 30, 2018, 40,000 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 $3,400,000.) Part C On October 1, 2018, 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, 2018, the Nicklaus Corporation declares a $0.21 per share cash dividend on common stock and a $0.38 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 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, 2018, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,900,000.) 3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2018.

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 $12 per share. Also on January 2, all 1,000,000 shares of preferred stock are issued at $30 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 $1,300,000.)

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

1. On June 30, 2018, the corporation reacquires 150,000 shares for the treasury at a price of $14 per share.
2. On July 31, 2018, 25,000 treasury shares are reissued at $17 per share.
3. On September 30, 2018, 25,000 treasury shares are reissued at $12 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 $2,750,000.)

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 $0.09 per share cash dividend on common stock and a $0.26 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 3% 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 $12 per share. The dividend will result in 114,000 (0.03 × 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 $2,250,000.)
3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2018.

Problem 18-12 Various shareholders' equity topics; comprehensive [LO18-1, 18-4, 18-5, 18-6, 18-7, 18-8]

Part A
In late 2017, 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, 2018, 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 $25 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 $1,900,000.)

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

1. On June 30, 2018, the corporation reacquires 280,000 shares for the treasury at a price of $12 per share.
2. On July 31, 2018, 40,000 treasury shares are reissued at $15 per share.
3. On September 30, 2018, 40,000 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 $3,400,000.)

Part C
On October 1, 2018, 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, 2018, the Nicklaus Corporation declares a $0.21 per share cash dividend on common stock and a $0.38 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 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, 2018, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,900,000.)
3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2018.

a)   Buyer A has entered into a contract for the sale of goods with Seller B. The contract provides that Seller B will deliver the goods on May 1, 2010. On May 1, 2010, Seller B informs A that it will not be able to perform the contract. Assume Buyer A was going to pay $3,000 for the goods under the contract with Seller B. Seller C will sell Buyer A the goods for $4,000 plus a transportation cost of $200. What remedies are available to A in this case?

b)   Buyer A has entered into a contract for the sale of goods with Seller B. The contract provides that Seller B will deliver the goods on May 1, 2010. On May 1, 2010, Buyer A informs B that it will not be able to perform the contract. Assume Buyer A was going to pay $3,000 for the goods under the contract with Seller B. Buyer C will buy the goods for $2,000. Additionally, during the time between the breach and Buyer’s C offer, it cost Seller B $500 to care for the goods. What remedies are available to B in this case?

c)   Buyer A has entered into a contract for the sale of goods with Seller B. The contract provides that Seller B will deliver the goods on May 1, 2010. On May 1, 2010, Buyer A informs B that it will not be able to perform the contract. Assume Buyer A was going to pay $3,000 for the goods under the contract with Seller B. The market price for the goods at the time of tender was $1,500. What remedies are available to B in this case?

1. Income Statement, Cost of Goods Manufactured

   Spencer Company produced 200,000 cases of sports drinks during the past calendar year. Each case of 1-liter bottles sells for $36. Spencer had 2,500 cases of sports drinks in finished goods inventory at the beginning of the year. At the end of the year, there were 11,500 cases of sports drinks in finished goods inventory. Spencer’s accounting records provide the following information:

   Purchases of direct materials	$2,340,000
   Direct materials inventory, January 1	290,000
   Direct materials inventory, December 31	110,000
   Direct labor	1,200,000
   Indirect labor	334,000
   Depreciation, factory building	525,000
   Depreciation, factory equipment	416,000
   Property taxes on factory	65,000
   Utilities, factory	150,000
   Insurance on factory	200,000
   Salary, sales supervisor	85,000
   Commissions, salespersons	218,000
   Advertising	500,000
   General administration	390,000
   Work-in-process inventory, January 1	440,000
   Work-in-process inventory, December 31	750,000
   Finished goods inventory, January 1	107,500
   Finished goods inventory, December 31	488,750

   Required:

   1. Prepare a cost of goods manufactured statement.

   Spencer Company
   Statement of Cost of Goods Manufactured
   For the Year Ended December 31
   Direct materials:
   Beginning inventory Beginning work in process Cost of goods manufactured Depreciation, factory building Depreciation, factory equipment Purchases Utilities, factory	$
   Add: Beginning work in process Add: Cost of goods manufactured Add: Depreciation, factory building Add: Ending inventory Add: Ending work in process Add: Indirect labor Add: Purchases
   Beginning work in process Ending inventory Ending work in process Materials available Purchases Total manufacturing costs added Utilities, factory	$
   Less: Beginning inventory Less: Beginning work in process Less: Cost of goods manufactured Less: Depreciation, factory building Less: Direct labor Less: Ending inventory Less: Ending work in process
   Cost of goods manufactured Depreciation, factory building Depreciation, factory equipment Direct labor Direct materials used in production Indirect labor Insurance on factory		$
   Beginning work in process Cost of goods manufactured Direct labor Ending inventory Ending work in process Insurance on factory Purchases
   Manufacturing overhead:
   Beginning inventory Beginning work in process Cost of goods manufactured Direct labor Ending inventory Indirect labor Purchases	$
   Beginning inventory Beginning work in process Depreciation, factory building Direct labor Ending inventory Ending work in process Purchases
   Beginning inventory Beginning work in process Cost of goods manufactured Depreciation, factory equipment Direct labor Ending inventory Ending work in process
   Beginning inventory Beginning work in process Direct labor Ending inventory Ending work in process Property taxes on factory Purchases
   Beginning inventory Beginning work in process Direct labor Ending inventory Ending work in process Purchases Utilities, factory
   Beginning inventory Beginning work in process Direct labor Ending inventory Ending work in process Insurance on factory Purchases
   Total manufacturing costs added		$
   Add: Beginning inventory Add: Beginning work in process Add: Ending inventory Add: Ending work in process Add: Property taxes on factory Add: Purchases Add: Utilities, factory
   Less: Beginning inventory Less: Beginning work in process Less: Direct labor Less: Ending inventory Less: Ending work in process Less: Indirect labor Less: Purchases
   Cost of goods manufactured		$

   Feedback

   2. Compute the cost of producing one case of sports drink last year. If required, round your answer to the nearest cent.

   $ per case

   Feedback

   3. Prepare an income statement on an absorption-costing basis. Show the percentage of sales that each line item represents. Round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35.

   Spencer Company
   Income Statement: Absorption Costing
   For the Year Ended December 31
   			Percent
   Administrative expenses Commissions, salespersons Cost of goods sold Ending finished goods inventory Goods available for sale Salary, sales supervisor Sales			%
   Cost of goods sold:
   Administrative expenses Advertising Beginning finished goods inventory Cost of goods manufactured Operating income Salary, sales supervisor Sales
   Add: Beg. finished goods inventory Add: Commissions, salespersons Add: Ending finished goods inventory Add: Goods available for sale Add: Operating income Add: Salary, sales supervisor Add: Sales
   Advertising Beginning finished goods inventory Commissions, salespersons Ending finished goods inventory Goods available for sale Operating income Salary, sales supervisor
   Less: Administrative expenses Less: Advertising Less: Beginning finished goods inventory Less: Commissions, salespersons Less: End. finished goods inventory Less: Goods available for sale Less: Gross margin			%
   Gross margin Gross loss
   Less: Operating expenses:
   Beginning finished goods inventory End. finished goods inventory Goods available for sale Gross margin Operating income Salary, sales supervisor Sales
   Beginning finished goods inventory Commissions, salespersons Cost of goods manufactured End. finished goods inventory Goods available for sale Gross margin Sales
   Advertising Beginning finished goods inventory Cost of goods manufactured End. finished goods inventory Goods available for sale Gross margin Sales			%
   Administrative expenses Beginning finished goods inventory End. finished goods inventory Goods available for sale Gross margin Net margin Sales			%
   Beginning finished goods inventory Cost of goods manufactured Cost of goods sold Ending finished goods inventory Goods available for sale Operating income Sales			%

1. The results of a mathematics placement exam at two different campuses of Mercy College follow:

What is the computed value of the test statistic?

3.0

4.0

2.0

11.9

2.

The results of a mathematics placement exam at two different campuses of Mercy College follow:

Is there a difference in the mean score of Campus 1 and Campus 2 of Mercy College? Given that the two population standard deviations are known, what is the p-value?

1.0000

0.9651

0.0651

0.0002

3.

Accounting procedures allow a business to evaluate their inventory at LIFO (Last In First Out) or FIFO (First In First Out). A manufacturer evaluated its finished goods inventory (in $ thousands) for five products both ways. Based on the following results, is LIFO more effective in keeping the value of his inventory lower?

What are the degrees of freedom?

12

4

16

17

Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.

Additional Information

1. Sales and production data for these first two years follow.

2. Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following.

3. Selling and administrative expenses consist of the following.

Prepare income statements for the company for each of its first two years under variable costing.

Hilton Corporation began operations on 1-1-2012. Hilton used the last-in-first-out (LIFO) inventory costing method from 1-1-2012 through 12-31-2014. Presented below are effects of using LIFO for 2014 and earlier years.

Hilton Corporation changed its inventory costing method from LIFO to the first-in-first-out (FIFO) as of 1-1-2015. Presented below are effects of using FIFO for 2014 and earlier years.

When Hilton issued its 2015 financial statements, it elected to provide comparative statements from the three previous years, i.e., 2012, 2013 and 2014. The change will be accounted for using the retrospective approach.

Required

When the 2015 financial statements are issued in April of 2016, what will be the comparative retained earnings from the 12-31-2013 balance sheet ?