Problem
Part A
In late 2015, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 6,000,000 shares of common stock carrying a $1 par value, and 2,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2016, 4,000,000 shares of the common stock are issued in exchange for cash at an average price of $12 per share. Also on January 2, all 2,000,000 shares of preferred stock are issued at $25 per share.
Required:
1. Prepare journal entries to record these transactions.
Record issue of common shares and Record issue of preferred stock.
2. Prepare the shareholders' equity section of the Nicklaus balance sheet as of March 31, 2016.
Part B
During 2016, the Nicklaus Corporation participated in three treasury stock transactions:
a. On June 30, 2016, the corporation reacquires 230,000 shares for the treasury at a price of $14 per share.
b. On July 31, 2016, 15,000 treasury shares are reissued at $17 per share.
c. On September 30, 2016, 15,000 treasury shares are reissued at $12 per share.
Required:
1. Prepare journal entries to record these transactions.
Record acquisition of treasury stock/ Record the reissuance of 15,000 treasury shares on July 31st / Record the reissuance of 15,000 treasury shares on September 30th
2. Prepare the Nicklaus Corporation shareholders' equity section as it would appear in a balance sheet prepared at September 30, 2016.