Chapter 18 Discussion - Nike is the world’s leading designer

Question # 00835301 Posted By: wildcraft Updated on: 12/07/2022 03:30 AM Due on: 12/07/2022
Subject Accounting Topic Accounting Tutorials:
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Chapter 18 Discussion Question

Nike is the world’s leading designer, marketer, and distributor of authentic athletic footwear, apparel, equipment, and accessories. The following is a press release from the company:



BEAVERTON, Ore.—(BUSINESS WIRE)—NIKE, Inc. (NYSE: NKE) announced today that its Board of Directors has approved a quarterly cash dividend of $0.20 per share. . . . This represents an increase of 11 percent versus the prior quarterly dividend rate of $0.18 per share. The dividend declared today is payable on January 2, to shareholders of record at the close of business December 4. “Today’s announcement, combined with the four-year $12 billion share repurchase program we announced . . ., demonstrates our continued confidence in generating strong cash flow and returns for shareholders through our new Consumer Direct Offense as we continue to invest in fueling sustainable, long-term growth and profitability.”


When the share repurchase program was announced the company also declared a stock split distributed in the form of a 100% stock dividend. At that time Nike’s 1,200 million shares were trading at $130 per share. Nike’s shares have a stated value of $0.001 per share.

Based on the information above and answer the following questions:

· Prepare the journal entry that Nike recorded to account for the stock split?

· Assume Nike repurchased 50 million shares after the stock split at an average price of $59 per share. The original issue price of the shares, after adjusting for the six stock splits since the shares were issued, was $0.15 per share. What entry would Nike have recorded to account for the repurchase? Nike views the repurchase of stock as a formal retirement of shares.

· Suppose Nike views the repurchase of stock as an acquisition of treasury stock. What entry would Nike have recorded to account for the repurchase?

· Prepare the entries for the declaration and for the payment of the cash dividend announced in the press release.

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