HW-1656 Phelps Corporation

HW-1656 Phelps Corporation

On January 5, 2014, Phelps Corporation received a charter granting the right to issue 5,000 shares of $100 par value, 8% cumulative and nonparticipating preferred stock, and 50,000 shares of $10 par value common stock. It then completed these transactions.

Jan 11 Issued 20,00 shares of common stock at $16 per share

Feb 1 Issued to sanchez corp. 4,000 shares of preferred stock for the following assets: machinery with a fair market value of $50,000; a factory building with a fair market value of $160,000; and land with an appraised value of $270,000.

July 29 Purchased 1,800 shares of common stock at $17 per share (use cost method).

August 10 sold the 1,800 treasury shares at $14 per share.

Dec 31 Declared a $0.25 per share cash dividend on the common stock and declared the preferred dividend.

Dec 31 Closed the income Summary account. There was a $175,700 net income.

Instructions:

a) Record the journal entries for the transactions listed above

b) prepare the stockholders equity section of Phelps Corporation’s balance sheet as of Dec 31, 2014.


 

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