Reference no: EM132683466
Problem - Stock Transactions for Corporate Expansion
On March 1 of the current year, the following accounts and their balances appear in the ledger of Mocha Corp., a coffee processor:
Preferred 2% Stock, $25 par (300,000 shares authorized, 120,000 shares issued) $3,000,000
Paid-In Capital in Excess of Par-Preferred Stock 480,000
Common Stock, $100 par (800,000 shares authorized, 250,000 shares issued) 25,000,000
Paid-In Capital in Excess of Par-Common Stock 2,000,000
Retained Earnings 50,000,000
At the annual stockholders' meeting on April 18, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately $14,000,000. The plan provided (a) that a building, valued at $3,500,000, and the land on which it is located, valued at $5,000,000, be acquired in accordance with preliminary negotiations by the issuance of 80,000 shares of common stock, (b) that 85,000 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow $3,000,000. The plan was approved by the stockholders and accomplished by the following transactions:
June 5. Issued 80,000 shares of common stock in exchange for land and a building, according to the plan.
June 16. Issued 85,000 shares of preferred stock, receiving $30 per share in cash.
June 29. Borrowed $3,000,000 from First City Bank, giving a 6% mortgage note.
No other transactions occurred during June.
Instructions - Journalize the entries to record the foregoing transactions.