| In late 2015, 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, 2016, 3,000,000 shares of the common stock are issued in exchange for cash at an average price of $15 per share. Also on January 2, all 1,000,000 shares of preferred stock are issued at $30 per share. | 2. | Prepare the shareholders' equity section of the Nicklaus balance sheet as of March 31, 2016. (Assume net income for the first quarter 2016 was $1,500,000.) | Part B | | During 2016, the Nicklaus Corporation participated in three treasury stock transactions: | | a. | On June 30, 2016, the corporation reacquires 190,000 shares for the treasury at a price of $17 per share. | | b. | On July 31, 2016, 45,000 treasury shares are reissued at $20 per share. | | c. | On September 30, 2016, 45,000 treasury shares are reissued at $15 per share. | | 1. | Prepare journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) | 2. | Prepare the Nicklaus Corporation shareholders' equity section as it would appear in a balance sheet prepared at September 30, 2016. (Assume net income for the second and third quarter was $2,950,000.) | Part C | | On October 1, 2016, 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, 2016, the Nicklaus Corporation declares a $0.13 per share cash dividend on common stock and a $0.30 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2016, to shareholders of record on November 15, 2016. | | On December 2, 2016, the Nicklaus Corporation declares a 1% stock dividend payable on December 28, 2016, to shareholders of record on December 14. At the date of declaration, the common stock was selling in the open market at $15 per share. The dividend will result in 58,000 (0.01 5,800,000) additional shares being issued to shareholders. | | 1. | Prepare journal entries to record the declaration and payment of these stock and cash dividends. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) | 2. | Prepare the December 31, 2016, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,450,000.) | 3. | Prepare a statement of shareholders' equity for Nicklaus Corporation for 2016. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.) | | | | | | |
