Reference no: EM131935571

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 4% Stock, $75 par (300,000 shares authorized, 110,000 shares issued) $8,250,000

Paid-In Capital in Excess of Par—Preferred Stock 1,650,000

Common Stock, $100 par (1,000,000 shares authorized, 200,000 shares issued) 20,000,000

Paid-In Capital in Excess of Par—Common Stock 1,600,000

Retained Earnings 40,000,000

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 $20,500,000. The plan provided (a) that a building, valued at $3,200,000, and the land on which it is located, valued at $4,700,000, be acquired in accordance with preliminary negotiations by the issuance of 75,000 shares of common stock, (b) that 60,000 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow $7,800,000. The plan was approved by the stockholders and accomplished by the following transactions:

May 11. Issued 75,000 shares of common stock in exchange for land and a building,

according to the plan.

May 20. Issued 60,000 shares of preferred stock, receiving $80 per share in cash.

May 31. Borrowed $7,800,000 from Laurel National, giving a 6% mortgage note.

Required:

Journalize the entries to record the foregoing transactions.

For a compound transaction, if an amount box does not require an entry, leave it blank.

May 11. Issued 75,000 shares of common stock in exchange for land and a building, according to the plan.

May 11

May 20. Issued 60,000 shares of preferred stock, receiving $80 per share in cash.

May 20

May 31. Borrowed $7,800,000 from Laurel National, giving a 6% mortgage note.

May 31