Question
As of December 1 of the current year, the following accounts and their balances appear in the general ledger of Latte Corp., a coffee processor:
As of December 1 of the current year, the following accounts and their balances appear in the general ledger of Latte Corp., a coffee processor:
2% Preferred Stock, $50 par (250,000 shares authorized, 77,000 shares issued) | $3,850,000 |
Paid-in capital in excess of par: preferred stock | 616,000 |
Common shares, $35 par (1,000,000 shares authorized, 419,000 shares issued) | 14.665.000 |
Paid-in capital in excess of par value: common shares | 1,676,000 |
Retained earnings | 190,700,000 |
At the March 31 meeting, the board of directors presented a plan to modernize and expand the plant's operations at a cost of approximately $11,000,000. The plan provided
(a) that a building, valued at $3,422,000, and the land on which it is located, valued at $1,570,000, would be acquired pursuant to preliminary negotiations through the issuance of 128,000 common shares
The shares outstanding when a corporation has issued only one class of shares.
(b) 41,800 unissued preferred shares are issued through an underwriter, and
(c) the corporation borrows $4,450,000. The plan was approved by the shareholders and was carried out through the following transactions:
May 11 | It issued 128,000 common shares in exchange for land and a building, according to the plan. |
20 | Issued 41,800 preferred shares, receiving $55 per share in cash. |
31 | Borrowed $4,450,000 from Laurel National, placing a 6% mortgage note. |
Journalize the entries to record the transactions for May.
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