Problem 15-1 On January 5, 2014, Phelps Corporation received a charter granting
ID: 2419885 • Letter: P
Question
Problem 15-1 On January 5, 2014, Phelps Corporation received a charter granting the right to issue 5,500 shares of $104 par value, 8% cumulative and nonparticipating preferred stock, and 51,700 shares of $10 par value common stock. It then completed these transactions. Issued 20,010 shares of common stock at $16 per share. Issued to Sanchez Corp. 4,900 shares of preferred stock for the following assets: equipment with a fair value of $56,960; a factory building with a fair value of $170,300; and land with an appraised value of $326,700. Purchased 1,980 shares of common stock at $20 per share. (Use cost method.) Sold the 1,980 treasury shares at $14 per share. Declared a $0.30 per share cash dividend on the common stock and declared the preferred dividend. Closed the Income Summary account. There was a $176,580 net income. Jan. 11 Feb. 1 July 29 Aug. 10 Dec. 31 Dec. 31 (a) Record the journal entries for the transactions listed above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record entries in the order displayed in the problem statement. Round answers to 0 decimal places, e.g. $5,275.)Explanation / Answer
Journal Entries for Phelps Corporation
Phelps Corporation
Stock Holders' Equity
December 31 2014
*($176580-$46,771-$11,880)
Date Account Title & Explanation Debit Credit January-11 Cash $320,160 Common Stock $200,100 Additional Paid in Capital-Common Stock $120,060 (Being 20,010 commons Stock issued at $16) February 1 Equipment $56,960 Factory Building $170,300 Land $326,700 Preferred Stock(4900*$104) $509,600 Additional Paid in capital-Preferred $44,360 July 29 Treasury Stock (1980*$20) $39,600 Cash $39,600 Aug -10 Cash (1980*$14) $27,720 Retained Earnings $11,880 Treasury Stock $39,600 December 31 Retained Earnings $46,771 Cash Dividend Payable-Equity $6,003 Cash Dividend Payable-Prefered $40,768 December 31 Income Summary $1,76,580 Retained Earnings $176,580