P15-1 (equity transactions and statement preparation)

P15-1 (Equity Transactions and Statement Preparation)

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 20,000 shares of common stock at $16 per share.


Feb. 1

Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: 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.)


Aug. 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.