Problem

On October 1, 2016, Nicklaus Corporation receives permission to replace its $1 par value common stock (6,000,000 shares authorized, 4,000,000 shares issued, and 3,800,000 shares outstanding) with a new common stock issue having a $.50 par value. Since the new par value is one-half the amount of the old, this represents a 2-for-1 stock split. That is, the shareholders will receive two shares of the $.50 par stock in exchange for each share of the $1 par stock they own. The $1 par stock will be collected and destroyed by the issuing corporation. On November 1, 2016, the Nicklaus Corporation declares a $0.20 per share cash dividend on common stock and a $0.37 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2016, to shareholders of record on November 15, 2016. On December 2, 2016, the Nicklaus Corporation declares a 2% stock dividend payable on December 28, 2016, to shareholders of record on December 14. At the date of declaration, the common stock was selling in the open market at $10 per share. The dividend will result in 152,000 (0.02 × 7,600,000) additional shares being issued to shareholders.

Required: 1. Prepare journal entries to record the declaration and payment of these stock and cash dividends.