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' 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.