Chapter 12, Problem 12.3APR

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—Preferred Stock	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
Retained Earnings	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.

Instructions

Journalize the entries to record the May transactions.