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Stock transactions for corporate expansion
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) | $ 4,000,000 |
Paid-In Capital in Excess of Par— |
560,000 |
Common Stock, $35 par (1,000,000 shares authorized, 400,000 shares issued) | 14,000,000 |
Paid-In Capital in Excess of Par—Common Stock | 1,200,000 |
180,000,000 |
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 $3,375,000, and the land on which it is located, valued at $1,500,000, be acquired in accordance with preliminary negotiations by the issuance issued through an underwriter, and (C) that the corporation borrow $4,000,000. The plan approved by the stockholders and accomplished by the following transactions:
May 11. | Issued 125,000 shares of common stock in exchange for land and a building, according to the plan. |
20. | Issued 40,000 shares of preferred stock, receiving $52 per share in cash. |
31. | Borrowed $4,000,000 from Laurel National, giving a 5% mortgage note. |
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