Question -
Part A - In late 2015, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 4,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2016, 2,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also on January 2, all 1,000,000 shares of preferred stock are issued at $20 per share.
Part B - During 2016, the Nicklaus Corporation participated in three treasury stock transactions: a. On June 30, 2016, the corporation reacquires 130,000 shares for the treasury at a price of $12 per share. b. On July 31, 2016, 15,000 treasury shares are reissued at $15 per share. c. On September 30, 2016, 15,000 treasury shares are reissued at $10 per share.
Required:
1. Prepare journal entries to record these transactions.
2. Prepare the Nicklaus Corporation shareholders' equity section as it would appear in a balance sheet prepared at September 30, 2016.