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 divident 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.
Answer will be sent by email as attachment.
