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.
