P15-1 Equity Transactions and Statement Preparation
On January 5, 2012, Phelps Corporation received a charter granting the right to issue 5,300 shares of $101 par value, 7% cumulative and nonparticipating preferred stock, and 50,700 shares of $11 par value common stock. It then completed these transactions.
Jan. 11 Issued 20,260 shares of common stock at $18 per share.
Feb. 1 Issued to Sanchez Corp. 4,400 shares of preferred stock for the following assets: machinery with a fair market value of $59,350; a factory building with a fair market value of $170,600; and land with an appraised value of $332,400.
Jul 29 Purchased 1,890 shares of common stock at $17 per share. (Use cost method.)
Aug. 10 Sold the 1,890 treasury shares at $14 per share.
Dec. 31 Declared a $0.30 per share cash dividend on the common stock and declared the preferred dividend.
Dec. 31 Closed the Income Summary account. There was a $180,640 net income.
a. Record the journal entries for the transactions listed above. (Round the answers to 0 decimal places, e.g. 125. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record entries in the order displayed in the problem statement.
b. Prepare the stockholders’ equity section of Phelps Corporation’s balance sheet as of December 31, 2012. (For preferred stock, common stock and treasury stock enter the account name only and do not provide the descriptive information provided in the question.)