AFM 461 Lecture : Rollover Rundown All the rollovers learned summarized into 2 pages.
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Thriller Corporation has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows:
Joe Jackson | 400 |
Mike Jackson (Joeâs son) | 200 |
Jane Jackson (Joeâs daughter) | 200 |
Vinnie Price (unrelated) | 200 |
Total | 1,000 |
Thriller Corporation has current E&P of $300,000 for this year and accumulated E&P at January 1 of this year of $500,000.
During this year, the corporation made the following distributions to its shareholders:
03/31: Paid a dividend of $10 per share to each shareholder ($10,000 in total).
06/30: Redeemed 200 shares of Joeâs stock for $200,000. Joeâs basis in the 200 shares redeemed was $100,000.
09/30: Redeemed 60 shares of Vinnieâs stock for $60,000. His basis in the 60 shares was $36,000.
12/31: Paid a dividend of $10/share to each shareholder ($7,400 in total).
Compute the corporationâs accumulated E&P at January 1 of next year. (Round all intermediate calculations to 2 decimal places. Round final answers to the nearest dollar amount.)
Problem 18-12 Various shareholders' equity topics; comprehensive[LO18-1, 18-4, 18-5, 18-6, 18-7, 18-8]
Part A |
In late 2015, the Nicklaus Corporation was formed. The corporatecharter authorizes the issuance of 5,000,000 shares of common stockcarrying a $1 par value, and 1,000,000 shares of $5 par value,noncumulative, nonparticipating preferred stock. On January 2,2016, 3,000,000 shares of the common stock are issued in exchangefor cash at an average price of $15 per share. Also on January 2,all 1,000,000 shares of preferred stock are issued at $30 pershare. |
Required: |
1. | Prepare journal entries to record these transactions.(If no entry is required for a particular transaction,select "No journal entry required" in the first accountfield.) |
2. | Prepare the shareholders' equity section of the Nicklaus balancesheet as of March 31, 2016. (Assume net income for the firstquarter 2016 was $1,500,000.) |
Part B | |
During 2016, the Nicklaus Corporation participatedin three treasury stock transactions: |
a. | On June 30, 2016, the corporation reacquires 190,000 shares forthe treasury at a price of $17 per share. |
b. | On July 31, 2016, 45,000 treasury shares are reissued at $20per share. |
c. | On September 30, 2016, 45,000 treasury shares are reissued at$15 per share. |
Required: |
1. | Prepare journal entries to record these transactions.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.) |
2. | Prepare the Nicklaus Corporation shareholders' equity section asit would appear in a balance sheet prepared at September 30, 2016.(Assume net income for the second and third quarter was$2,950,000.) |
Part C |
On October 1, 2016, Nicklaus Corporation receives permission toreplace its $1 par value common stock (5,000,000 shares authorized,3,000,000 shares issued, and 2,900,000 shares outstanding) with anew common stock issue having a $.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 $.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, 2016, the NicklausCorporation declares a $0.13 per share cash dividend on commonstock and a $0.30 per share cash dividend on preferred stock.Payment is scheduled for December 1, 2016, to shareholders ofrecord on November 15, 2016. |
On December 2, 2016, the NicklausCorporation declares a 1% stock dividend payable on December 28,2016, to shareholders of record on December 14. At the date ofdeclaration, the common stock was selling in the open market at $15per share. The dividend will result in 58,000 (0.01 Ã 5,800,000)additional shares being issued to shareholders. |
Required: |
Prepare journal entries to record the declaration and payment ofthese stock and cash dividends. (If no entry is requiredfor a transaction/event, select "No journal entry required" in thefirst account field.) 1.Record the entry for a 2-for-1 stock split. 2.Record declaration of cash dividend for common shares andpreferred shares. 3.Record the entry on date of record. 4.Record payment of cash dividend for common shares andpreferred shares. 5.Record declaration of common stock dividend. 6.Record distribution of common stock dividend. | |
2. | Prepare the December 31, 2016, shareholders' equity section ofthe balance sheet for the Nicklaus Corporation. (Assume net incomefor the fourth quarter was $2,450,000.) |
3. | Prepare a statement of shareholders' equity for NicklausCorporation for 2016. (Amounts to be deducted should beindicated with a minus sign. Enter your answers inthousands.) |