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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 Par—Preferred 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 Par—Common Stock 1,200,000
Retained Earnings 180,000,000
At the annual stockholders
The owners of a corporation.
’ 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
The stock outstanding when a corporation has issued only one class of 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.
JOURNAL
DATE DESCRIPTION POST. REF. DEBIT CREDIT
1
2
3
4
5
6
7
8
9
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
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