n December 1 of the current year,the tolowing accounts and their balances appear

Question

n December 1 of the current year,the tolowing accounts and their balances appear in the ledger of Latite Corp, a coffe processor Preferred 2% Stock, $50 par (240,000 shares authorized, 84,000 shares issued) Paid-In Capital in Excess of Par-Preferred Stock Common Stock, $35 par (1,000,000 shares authorized, 387,000 shares issued) Paid-In Capital in Excess of Par-Common Stock Retained Earnings $4,200,000 672,000 13,545,000 774,000 197,720,000 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 $3,460,000, and the land on which it is located, valued at $1,423,000, be acquired in accordance with preliminary negotiations by the issuance of 128,500 shares of common stock, (b) that 39,100 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow $3,800,000. The plan was approved by the stockholders and accomplished by the following transactions: May 11 20 31 Issued 128,500 shares of common stock in exchange for land and a building, according to the plan. Issued 39,100 shares of preferred stock, receiving $51 per share in cash Borrowed $3,800,000 from Laurel National, giving a 4% mortgage note. Journalize the entries to record the May transactions. Refer to the Chart of Accounts for exact wording of account titles

Explanation / Answer

Journal entries to record May transactions Date Account Titles Debit Credit May.11 Land $1,423,000 Building $3,460,000 Common stock ($35 Par) $4,497,500 Paid in Capital in excess of Par - Common stock $385,500 (issued 128500 shares of common stock @ $38 per share in exchange of Land and Building) May.20 Cash $1,994,100 Preferred stock ($35 Par) $1,955,000 Paid in Capital in excess of Par - Preferred stock $39,100 (issued 39100 shares of preferred stock @ $51 per share for Cash) May.31 Cash $3,800,000 Mortgage Note Payable $3,800,000 (Borrowed $3800000 from Laurel National giving a 4% mortgage note)

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