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.
Givin below the journal entries. However question seems incomeplete (preferred stock not given), equity statement can not be completed:
|1. Journal Entry|
|Oct 1||No Entry|
|Nov 1||Retained Earning||2340000|
|Nov 15||No Entry|
|Dec 1||Dividend Payable-Common||660000||0.11*6000000|
|Dividend Payable-Preferred (Assuming 6 million shares)||1680000||0.28*6000000|
|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|
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