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 11 Issued 20,00 shares of common stock at $16 per share Feb 1 Issued to Sanchez corp. 4,000 shares of preferred stock forth following assests: 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 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 Dec 31, 2010.

(a)

 

(b)

January 11 Cash (20,000 X $16)... Common Stock (20,000 X $10) 320,000 200,000 Paid-in Capital in Excess of Par-Common.. 120,000 February 1 Machinery. 50,000 160,000 Factory Building. Land . Preferred Stock (4,000 X $100).. 270,000 400,000 80,000 Paid-in Capital in Excess of Par-Preferred.. July 29 Treasury Stock (1,800 X $17). 30,600 Cash. 30,600 August 10 Cash (1,800 X $14).. Retained Earnings (1,800 X $3). Treasury Stock 25,200 5,400* 30,600 *(The debit is made to Retained Earnings because no Paid-in Capital from Treasury Stock exists.)