On January 5, 2020, 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.1Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: equipmentwith a fair value of $50,000; a factory building with a fair value of $160,000; andland with an appraised value of $270,000.July29Purchased 1,800 shares of common stock at $17 per share. (Use cost method.)Aug.10Sold the 1,800 treasury shares at $14 per share.Dec.31Declared a $0.25 per share cash dividend on the common stock and declared thepreferred dividend.Dec.31Closed the Income Summary account. There was a $175,700 net income.Instructionsa. 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, 2020.

Journal entries includes the recording of each monetary transaction in the books of accounts of a…

Answered: On January 5, 2020, Phelps Corporation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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On January 5, 2020, 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: 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.
July	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.

b. Prepare the stockholders’ equity section of Phelps Corporation's balance sheet as of December 31, 2020.

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