On December 1 of the current year, the following accounts and their balances app

Question

On December 1 of the current year, the following accounts and their balances appear in the ledger of Latte Corp., a coffee processor:

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 $3,301,000, and the land on which it is located, valued at $692,000, be acquired in accordance with preliminary negotiations by the issuance of 121,000 shares of common stock, (b) that 41,000 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow $3,750,000. The plan was approved by the stockholders and accomplished by the following transactions:

Journalize the entries to record the May transactions. Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

Journal

Journalize the entries to record the May transactions. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

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Preferred 2% Stock, $50 par (250,000 shares authorized, 82,000 shares issued) $4,100,000 Paid-In Capital in Excess of Par—Preferred Stock 656,000 Common Stock, $30 par (1,000,000 shares authorized, 402,000 shares issued) 12,060,000 Paid-In Capital in Excess of Par—Common Stock 1,206,000 Retained Earnings 193,830,000

Explanation / Answer

Latte Corp. General Ledger Date Account tittle & Explanation Debit Credit 11 May Building $3,301,000.00 Land $692,000.00 Common Stock ( 121000*$30) 3630000 Paid in Excess of Par- Common $363,000.00 ( Being Building & Land acquire by issued Common Stock) 20 May Cash ( 41000*$53) $2,173,000.00 Preferred Stock (41000*$50) $2,050,000.00 Paid in Excess of Par- Preferred Stock $123,000.00 ( Being Preferred Stock issued) 31 May Cash $3,750,000.00 Mortgage Payable $3,750,000.00 Being Amount Borrowed by Mortgage Note

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