Concept explainers
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 $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, 2018, the Nicklaus Corporation declares a $0.05 per share cash dividend on common stock
and a $0.25 per share cash dividend on
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.
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
3. Prepare a statement of shareholders’ equity for Nicklaus Corporation for 2018.
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