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 ParPreferred 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 ParCommon 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 of 125,000 shares of common stock, (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. |
Journalize the entries to record the May transactions. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTS |
Latte Corp. |
General Ledger |
| ASSETS | 110 | Cash | 120 | Accounts Receivable | 131 | Notes Receivable | 132 | Interest Receivable | 141 | Merchandise Inventory | 145 | Office Supplies | 151 | Prepaid Insurance | 181 | Land | 191 | Building | 192 | Accumulated Depreciation-Buildings | | LIABILITIES | 210 | Accounts Payable | 221 | Notes Payable | 226 | Interest Payable | 231 | Cash Dividends Payable | 236 | Stock Dividends Distributable | 241 | Salaries Payable | 261 | Mortgage Note Payable | | EQUITY | 311 | Common Stock | 312 | Paid-In Capital in Excess of Par-Common Stock | 315 | Treasury Stock | 321 | Preferred Stock | 322 | Paid-In Capital in Excess of Par-Preferred Stock | 331 | Paid-In Capital from Sale of Treasury Stock | 340 | Retained Earnings | 351 | Cash Dividends | 352 | Stock Dividends | 390 | Income Summary | | | REVENUE | 410 | Sales | 610 | Interest Revenue | | EXPENSES | 510 | Cost of Merchandise Sold | 515 | Credit Card Expense | 520 | Salaries Expense | 531 | Advertising Expense | 532 | Delivery Expense | 533 | Selling Expenses | 534 | Rent Expense | 535 | Insurance Expense | 536 | Office Supplies Expense | 537 | Organizational Expenses | 561 | Depreciation Expense-Building | 590 | Miscellaneous Expense | 710 | Interest Expense | |