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 (260,000 shares authorized, 76,000 shares issued) $3,800,000 Paid-In Capital in Excess of Par—Preferred Stock 456,000 Common Stock, $30 par (1,000,000 shares authorized, 419,000 shares issued) 12,570,000 Paid-In Capital in Excess of Par—Common Stock 1,676,000 Retained Earnings 159,380,000 At the annual stockholders’ 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 $3,335,000, and the land on which it is located, valued at $898,000, be acquired in accordance with preliminary negotiations by the issuance of 124,500 shares of common stock valued at $34 per share, (b) that 39,800 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow $4,100,000. The plan was approved by the stockholders and accomplished by the following transactions: May 11 Issued 124,500 shares of common stock in exchange for land and a building, according to the plan. 20 Issued 39,800 shares of preferred stock, receiving $53 per share in cash. 31 Borrowed $4,100,000 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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 (260,000 shares authorized, 76,000 shares issued)	$3,800,000
Paid-In Capital in Excess of Par—Preferred Stock	456,000
Common Stock, $30 par (1,000,000 shares authorized, 419,000 shares issued)	12,570,000
Paid-In Capital in Excess of Par—Common Stock	1,676,000
Retained Earnings	159,380,000

At the annual stockholders’ 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 $3,335,000, and the land on which it is located, valued at $898,000, be acquired in accordance with preliminary negotiations by the issuance of 124,500 shares of common stock valued at $34 per share, (b) that 39,800 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow $4,100,000. The plan was approved by the stockholders and accomplished by the following transactions:

May 11	Issued 124,500 shares of common stock in exchange for land and a building, according to the plan.
20	Issued 39,800 shares of preferred stock, receiving $53 per share in cash.
31	Borrowed $4,100,000 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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