Warner Inc. & Phelps Corporation
1.The common stock of Warner Inc. is currently selling at $118 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $8; book value is $73 per share. 6.10 million shares are issued and outstanding.
Prepare the necessary journal entries assuming the following. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(a) The board votes a 2-for-1 stock split.
(b) The board votes a 100% stock dividend.
2.On January 5, 2012, Phelps Corporation received a charter granting the right to issue 5,400 shares of $102 par value, 8% cumulative and nonparticipating preferred stock, and 53,300 shares of $11 par value common stock. It then completed these transactions.
Jan. 11 Issued 21,340 shares of common stock at $18 per share.
Feb. 1 Issued to Sanchez Corp. 5,000 shares of preferred stock for the following assets: equipment with a fair value of $59,700; a factory building with a fair value of $170,100; and land with an appraised value of $327,400.
July 29 Purchased 2,000 shares of common stock at $20 per share. (Use cost method.)
Aug. 10 Sold the 2,000 treasury shares at $13 per share.
Dec. 31 Declared a $0.40 per share cash dividend on the common stock and declared the preferred dividend.
Dec. 31 Closed the Income Summary account. There was a $184,330 net income.
(a) Record the journal entries for the transactions listed above. (Round answers to 0 decimal places, e.g. 125. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record entries in the order displayed in the problem statement.)
(b) Prepare the stockholders’ equity section of Phelps Corporation’s balance sheet as of December 31, 2012. (For preferred stock, common stock and treasury stock enter the account name only and do not provide the descriptive information provided in the question.)
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