chapter 18 -- question 10 -- prebuilt--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 2,800,000 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 $0.14 per share cash dividend on common stock and a $0.31 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 2% 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 112,000 (0.02 x 5,600,000) 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 $2,550,000).
3. Prepare a statement of shareholders equity for Nicklaus Corporation for 2018

Nicklaus Corporation Balance Sheet Shareholders Equity Section December 31, 2018
Shareholders equity
Total shareholders equity

Nicklaus Corporation Statement of Shareholders Equity For the Year Ended Dec. 31, 2018 ($ in 000s)
	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Total Shareholders Equity
Jan 2, 2018
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, 2018	0	0	0	0	0	0