‘To be solved by AjKaushal’ Please help Part B During 2013, the Nicklaus Corporation participated in three treasury stock transactions: a. On June 30, 2013, the corporation reacquires 20

‘To be solved by AjKaushal’

Please help

Part B

During 2013, the Nicklaus Corporation participated in three treasury stock transactions:

a.

On June 30, 2013, the corporation reacquires 200,000 shares for the treasury at a price of $12 per share.

b.

On July 31, 2013, 50,000 treasury shares are reissued at $15 per share.

c.

On September 30, 2013, 50,000 treasury shares are reissued at $10 per share.

2.Prepare the Nicklaus Corporation shareholders’ equity section as it would appear in a balance sheet prepared at September 30, 2013. (Assume net income for the second and third quarter was $3,000,000.) (Enter your answers in whole dollars.)

Part C:On October 1, 2013, 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, 2013, the Nicklaus Corporation declares a $0.05 per share cash dividend on common stock and a $0.25 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2013, to shareholders of record on November 15, 2013.

On December 2, 2013, the Nicklaus Corporation declares a 1% stock dividend payable on December 28, 2013, 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. Note: Dividends are not paid on shares held in the treasury. Cash dividends are paid only on the 5,800,000 common shares outstanding. (If no entry is required for a particular transaction, select “No journal entry required” in the first account field.)

2. Prepare the December 31, 2013, shareholders’ equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,500,000.) (Enter your answers in whole dollars.)

3. Prepare a statement of shareholders’ equity for Nicklaus Corporation for 2013. (Enter your answers in thousands.)

ATTACHMENT PREVIEW

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Student Name:
Class:
Problem 18-12
Part A, Requirement 1:
General Journal
Account
Debit
Credit
January 2, 2013
Cash
Common stock
Paid-in capital – excess of par, common
January 2, 2013
Cash
Preferred stock
Paid-in capital – excess of par, preferred
Part A, Requirement 2:
NICKLAUS CORPORATION
Balance Sheet-Shareholders’ Equity Section
March 31, 2013
Shareholders’ equity
Preferred stock, $5 par, authorized 1,000,000 shares,
issued and outstanding 1,000,000 shares
Common stock, $1 par, authorized 5,000,000 shares,
issued and outstanding 3,000,000 shares
Paid-in capital – excess of par
Retained earnings
Total shareholders’ equity
Part B, Requirement 1:
NICKLAUS CORPORATION
General Journal
Account
Debit
Credit
June 30, 2013
Treasury stock
Cash
July 31, 2013
Cash
Treasury stock
Paid-in capital – share repurchase
September 30, 2013
Cash
Paid-in capital – share repurchase
Treasury stock
Part B, Requirement 2:
NICKLAUS CORPORATION
Balance Sheet-Shareholders’ Equity Section
September 30, 2013
Shareholders’ equity
Preferred stock, $5 par, authorized 1,000,000 shares,
issued and outstanding 1,000,000 shares
Common stock, $1 par, authorized 5,000,000 shares,
issued 3,000,000 shares, 2,900,000 shares outstanding
Paid-in capital – excess of par
Paid-in capital – share repurchase
Retained earnings
Less: Treasury stock (200,000 shares at cost)
Total shareholders’ equity
Part C, Requirement 1:
NICKLAUS CORPORATION
General Journal
Account
Debit
Credit
October 1, 2013
No entry
November 1, 2013
Retained earnings
Dividends payable – common
Dividends payable – preferred
November 15, 2013
No Entry
December 1, 2013
Dividends payable – common
Dividends payable – preferred
Cash
December 2, 2013
Retained earnings
Common stock dividends distributable
Paid-in capital – excess of par, common
December 28, 2013
Common stock dividends distributable
Common stock
Part C, Requirement 2:
NICKLAUS CORPORATION
Balance Sheet-Shareholders’ Equity Section
December 31, 2013
Shareholders’ equity
Preferred stock, $5 par, authorized 1,000,000 shares,
issued and outstanding 1,000,000 shares
Common stock, $.50 par, authorized 10,000,000 shares,
issued 6,058,000 shares, 5,858,000 shares outstanding
Paid-in capital – excess of par
Paid-in capital – share repurchase
Retained earnings
Less: Treasury stock (100,000 shares at cost)
Total shareholders’ equity
Part C, Requirement 3:
NICKLAUS CORPORATION
Statement of Shareholders’ Equity
For the Year Ended December 31, 2013
($ in 000s)
Additional
Total
Preferred
Common
Paid-in
Retained
Treasury
Shareholders’
Stock
Stock
Capital
Earnings
Stock
Equity
January 2, 2013
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
December 31, 2013

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