On December 1 of the current year, the following accounts and their balances appear in the ledger of Latte Corp., a coffee processor:
Preferred 2% Stock, $50 par (250,000 shares authorized, 80,000 shares issued)$4,000,000Paid-In Capital in Excess of ParâPreferred Stock560,000Common Stock, $35 par (1,000,000 shares authorized, 400,000 shares issued)14,000,000Paid-In Capital in Excess of ParâCommon Stock1,200,000Retained Earnings180,000,000
At the annual stockholdersâ meeting on March 31, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately $11,000,000. The plan provided (a) that a building, valued at $3,375,000, and the land on which it is located, valued at $1,500,000, be acquired in accordance with preliminary negotiations by the issuance of 125,000 shares of common stock, (b) that 40,000 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow $4,000,000. The plan was approved by the stockholders and accomplished by the following transactions:
May 11Issued 125,000 shares of common stock in exchange for land and a building, according to the plan.20Issued 40,000 shares of preferred stock, receiving $52 per share in cash.31Borrowed $4,000,000 from Laurel National, giving a 5% mortgage note.
Journalize the entries to record the May transactions. Refer to the Chart of Accounts for exact wording of account titles.
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