On January 5 2010 Phelps Corporation Received Charter

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. 11Issued 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: 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 29Purchased 1,800 shares of common stock at $17 per share. (Use cost method.)

Aug.1 0Sold 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.

(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,

2010.

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