Question

Port C On October 1, 2021, 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 $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 $0.08 per share cash dividend on common stock and a $0.24 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 2% 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 76,000 (0.02 x 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, 2021, shareholders' equity section of the balance sheet for the Nicklaus Corporation (Assume net income for the fourth quarter was $2.200,000) 3. Prepare a statement of shareholders' equity for Nicklaus Corporation for 2021

Answer 1

For requirement 2 and 3 i need information of part A and B.

Part C
Requirement 1
Date	Accout Titles  & Explanation	Debit	Credit
1-Oct	NO ENTRY
1-Nov	Retained earnings	544000
	Dividends payable – common ($.08 x 1,900,000 x 2)		304000
	Dividends payable – preferred ($.24 x 1,000,000)		240000
15-Nov	NO ENTRY
1-Dec	Dividends payable – common	304000
	Dividends payable – preferred	240000
	Cash		544,000
2-Dec	Retained earnings ($10 fair value x 76000 shares)	760000
	Common stock dividends distributable ($.50 par x 76,000 shares)		38000
	Paid-in capital – excess of par, common (difference)		722000
	1900000 x 2 x 2% shares = 76000 shares
28-Dec	Common stock dividends distributable	38000
	Common stock		38000