Equity Transactions and Statement Preparation
On 5th January, 2010, Phelps Corporation received a charter granting the right to issue 5,000 shares of $100 par value, 8 percent cumulative and nonparticipating preferred stock, and 50,000 shares of $10 par cost 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 subsequent 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.
Aug. 10 Sold the 1,800 treasury shares at $14 per share.
Dec. 31 Declared a $0.25 per share cash dividend on common stock and declared preferred dividend.
Dec. 31 Closed the Income Summary account. There was a $175,700 net income.