P15-1 (Equity Transactions and Statement Preparation) On January 5, 2014, Phelps Corporation received a chapter 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 July 29 Aug. 10 Dec. 31 Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: equipment with a fair value of $50,000; a factory building with a fair value of $160,000; and land with an appraised value of $270,000. Purchased 1,800 shares of common stock at $17 per share. (Use cost method.) Sold the 1,800 treasury shares at $14 per share. 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 December 31, 2014.

Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.6E
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P15-1 (Equity Transactions and Statement Preparation) On January 5, 2014, Phelps Corporation received
a chapter 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
July 29
Aug. 10
Dec. 31
Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: equipment with a fair
value of $50,000; a factory building with a fair value of $160,000; and land with an appraised value of
$270,000.
Purchased 1,800 shares of common stock at $17 per share. (Use cost method.)
Sold the 1,800 treasury shares at $14 per share.
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 December 31,
2014.
Transcribed Image Text:P15-1 (Equity Transactions and Statement Preparation) On January 5, 2014, Phelps Corporation received a chapter 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 July 29 Aug. 10 Dec. 31 Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: equipment with a fair value of $50,000; a factory building with a fair value of $160,000; and land with an appraised value of $270,000. Purchased 1,800 shares of common stock at $17 per share. (Use cost method.) Sold the 1,800 treasury shares at $14 per share. 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 December 31, 2014.
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