Answer Happy

On October 1, 2021, Nicklaus Corporation receives permission toreplace its $1 par value common stock (5,000,000 shares authorized,3,000,000 shares issued, and 2,800,000 shares outstanding) with anew common stock issue having a $0.50 par value. Since the new parvalue is one-half the amount of the old, this represents a 2-for-1stock split. That is, the shareholders will receive two shares ofthe $0.50 par stock in exchange for each share of the $1 par stockthey own. The $1 par stock will be collected and destroyed by theissuing corporation.On November 1, 2021, the Nicklaus Corporation declares a $0.14 pershare cash dividend on common stock and a $0.31 per share cashdividend 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% stockdividend payable on December 28, 2021, to shareholders of record onDecember 14. At the date of declaration, the common stock wasselling in the open market at $10 per share. The dividend willresult in 112,000 (0.02 × 5,600,000) additional shares being issuedto shareholders.Required:1. Prepare journal entries to record thedeclaration and payment of these stock and cash dividends.2. Prepare the December 31, 2021,shareholders' equity section of the balance sheet for the NicklausCorporation. (Assume net income for the fourth quarter was$2,550,000.)3. Prepare a statement of shareholders'equity for Nicklaus Corporation for 2021.