P15-1 (LO1,2,3,4) Equity Transactions and Statement Preparation On January 5, 2020, Phelps Corporation received a charter granting the right to issue common and preferred stock as provided below: Cumulative and nonparticipating preferred stock: Number of shares authorized 5,000 shares Par value $ 100 per share Dividend rate 8% Common stock: Number of shares authorized 50,000 shares Par value $ 10 per share It then completed these transactions. Jan. 11 Issued common stock Number of shares 20,000 Issue price per share $ 16.00 Feb. 1 Issued preferred stock to Sanchez Corp. for assets with the following values: Fair value of equipment $ 50,000 Fair value of a factory building $ 160,000 Appraised value of land $ 270,000 Number of shares issued 4,000 Jul. 29 Purchased shares of common stock (use the cost method) Number of shares purchased 1,800 Purchase price per share $ 17.00 Aug. 10 Sold treasury shares Number of shares sold 1,800 Selling price per share $ 14.00 Dec. 31 Declared cash dividend on the common stock Dividend per share $ 0.25 Declared the preferred dividend Dec. 31 Closed the Income Summary account. Net income during 2020 $ 175,700 Instructions: (a) Record the journal entries for the transactions listed above. Debit Credit Jan. 11 Feb. 1 Jul. 29 Aug. 10 Dec. 31 Common stock cash dividend Preferred stock cash dividend Total cash dividend Dec. 31 (b) Prepare the stockholders' equity section of Phelps Corporation's balance sheet as of December 31, 2020.

P15-1 (LO1,2,3,4) Equity Transactions and Statement Preparation On January 5, 2020, Phelps Corporation received a charter granting the right to issue common and preferred stock as provided below: Cumulative and nonparticipating preferred stock: Number of shares authorized 5,000 shares Par value $ 100 per share Dividend rate 8% Common stock: Number of shares authorized 50,000 shares Par value $ 10 per share It then completed these transactions. Jan. 11 Issued common stock Number of shares 20,000 Issue price per share $ 16.00 Feb. 1 Issued preferred stock to Sanchez Corp. for assets with the following values: Fair value of equipment $ 50,000 Fair value of a factory building $ 160,000 Appraised value of land $ 270,000 Number of shares issued 4,000 Jul. 29 Purchased shares of common stock (use the cost method) Number of shares purchased 1,800 Purchase price per share $ 17.00 Aug. 10 Sold treasury shares Number of shares sold 1,800 Selling price per share $ 14.00 Dec. 31 Declared cash dividend on the common stock Dividend per share $ 0.25 Declared the preferred dividend Dec. 31 Closed the Income Summary account. Net income during 2020 $ 175,700 Instructions: (a) Record the journal entries for the transactions listed above. Debit Credit Jan. 11 Feb. 1 Jul. 29 Aug. 10 Dec. 31 Common stock cash dividend Preferred stock cash dividend Total cash dividend Dec. 31 (b) Prepare the stockholders' equity section of Phelps Corporation's balance sheet as of December 31, 2020.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 81PSA

See similar textbooks

Related questions

Question

P15-1 (LO1,2,3,4) Equity Transactions and Statement Preparation
On January 5, 2020, Phelps Corporation received a charter granting the right to issue common and preferred stock as provided below:

	Cumulative and nonparticipating preferred stock:
		Number of shares authorized	5,000	shares
		Par value		$ 100	per share
		Dividend rate		8%
	Common stock:
		Number of shares authorized	50,000	shares
		Par value		$ 10	per share

It then completed these transactions.

	Jan. 11	Issued common stock
			Number of shares		20,000
			Issue price per share		$ 16.00
	Feb. 1	Issued preferred stock to Sanchez Corp. for assets with the following values:

			Fair value of equipment		$ 50,000
			Fair value of a factory building		$ 160,000
			Appraised value of land		$ 270,000
			Number of shares issued		4,000
	Jul. 29	Purchased shares of common stock (use the cost method)
			Number of shares purchased		1,800
			Purchase price per share		$ 17.00
	Aug. 10	Sold treasury shares
			Number of shares sold		1,800
			Selling price per share		$ 14.00
	Dec. 31	Declared cash dividend on the common stock
			Dividend per share		$ 0.25
		Declared the preferred dividend
	Dec. 31	Closed the Income Summary account.
			Net income during 2020		$ 175,700

Instructions:
(a)	Record the journal entries for the transactions listed above.

			Debit	Credit
	Jan. 11




	Feb. 1






	Jul. 29



	Aug. 10




	Dec. 31



		Common stock cash dividend
		Preferred stock cash dividend
		Total cash dividend

	Dec. 31



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


	PHELPS CORPORATION
	Stockholders' Equity
	December 31, 2020

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here