15th Edition

ISBN: 9781337885928

Author: WARREN

Publisher: CENGAGE L

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Chapter 13, Problem 2PA

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:

Chapter 13, Problem 2PA, Stock transactions for corporate expansion On December 1 of the current year, the following accounts

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 of 125,000 shares of common stock valued at $39 per share, (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 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.

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Chapter 13, Problem 1PA

Chapter 13, Problem 3PA

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Chapter 13 Solutions

FINANCIAL ACCOUNTING

Ch. 13 - Of two corporations organized at approximately the...Ch. 13 - A stockbroker advises a client to buy preferred...Ch. 13 - A corporation with both preferred stock and common...Ch. 13 - An owner of 2,500 shares of Simmons Company common...Ch. 13 - Prob. 5DQ Ch. 13 - What is the primary purpose of a stock split?Ch. 13 - A corporation reacquires 60,000 shares of its own...Ch. 13 - The treasury stock in Discussion Question 7 is...Ch. 13 - What are the three classifications of restrictions...Ch. 13 - Prob. 10DQ

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Solution Summary: The author explains that common stock is the ordinary shares that a corporation issues to the investors in order to raise funds.

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