acc423 on january 5 2010 phelps corporation received a charter granting the right to 491600

P15-1 (Equity Transactions and Statement Preparation)

On January 5, 2010, 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 20,000 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.

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

Aug. 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. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

b. Prepare the stockholders’ equity section of Phelps Corporation’s balance sheet as of December 31, 2010.