On January 5, 2025, Phelps Corporation received a charter granting the right to issue 5,000 shares of
Question:
On January 5, 2025, 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.
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 December 31, 2025.
Jan. 11 Feb. 1 July 29 Aug. 10 Dec. 31 Dec. 31 Issued 20,000 shares of common stock at $16 per share. Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: equipment with a fair value of $50,000; a factory building with a fair value of $160,000; and land with an appraised value of $270,000. Purchased 1,800 shares of common stock at $17 per share. (Use cost method.) Sold the 1,800 treasury shares at $14 per share. Declared a $0.25 per share cash dividend on the common stock and declared the preferred dividend. Closed the Income Summary account. There was a $175,700 net income.
Step by Step Answer:
a The debit is made to Retained Earnings because no Paidin Capital from Treasury ...View the full answer
Intermediate Accounting
ISBN: 9781119790976
18th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Related Video
A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
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