Part A In late 2015, the Nicklaus Corporation was formed. The corporate charter

Question

Part A In late 2015, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 8,000,000 shares of common stock carrying a 51 par value, and 2,000,000 shares of 55 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 $10 per share. Also on January 2, all 2,000,000 shares of preferred stock are issued at 520 per share. 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 account field.) View transaction list Journal entry worksheet Record issue of common shares. Note: Enter debits before credits. Date General Journal Debit Credit January 02 Record entry Clear entry View general jounal

Explanation / Answer

Solution:-

Part A:-

1. Prepare journal entries:-

2. Shareholder's equity section:-

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Date General journal Debit Credit January 2 Cash (amount received) 40,000,000 Common stock ($1 par x 4,000,000 shares) 4,000,000 Paid-in capital – excess of par, common (difference) 36,000,000 (Record issuance of common stock) January 2 Cash (amount received) 40,000,000 Preferred stock ($5 par x 2,000,000 shares) 10,000,000 Paid-in capital – excess of par, preferred (difference) 30,000,000 (Record issuance of preferred stock)

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