P14.1 (LO 1, 2, 3, 4) (Equity Transactions and Statement Preparation) 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. Jan. 11 Issued 20,000 shares of common stock at $16 per share. Feb. 1 July29 Aug. 10 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. 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 December 31, 2025. (a) Cash (20,000 x $16) January 11 320,000 200,000 120,000 Common Stock (20,000 x $10) Paid-in Capital in Excess of Par-Common Stock February 1 Equipment.......... 50,000 Buildings. 160,000 Land........ 270,000 Preferred Stock (4,000 x $100).. 400,000 Paid-in Capital in Excess of Par-Preferred Stock 80,000 July 29 Treasury Stock (1,800 x $17).. Cash........... 30,600 30,600 August 10 Cash (1,800 x $14). 25,200 Retained Earnings (1,800 x $3).. 5,400* Treasury Stock.... 30,600 *(The debit is made to Retained Earnings because no Paid-in Capital from Treasury Stock exists.) Retained Earnings... Dividend Payable... December 31 37,000 37,000* *Common Stock Cash Dividend: Common shares outstanding Common cash dividend 20,000 x $.25 $5,000 Preferred Stock cash dividend: 4,000 x $100 x .08 = $32,000 Total cash dividends: $5,000+ $32,000 = $37,000 Income Summary. Retained Earnings. December 31 175,700 175,700 (b) PHELPS CORPORATION Stockholders' Equity December 31, 2025 Capital stock Preferred stock-par value $100 per share, 8% cumulative and nonparticipating, 5,000 shares authorized, 4,000 shares issued and outstanding..... Common stock-par value $10 per share, 50,000 shares authorized, 20,000 shares issued and outstanding.......... Total capital stock.......... Additional paid-in capital In excess of par-preferred In excess of par-common Total paid-in capital..... Retained earnings Total stockholders' equity *($175,700 $5,400 - $37,000) $400,000 200,000 $600,000 80,000 120,000 200,000 800,000 133,300* $933,300