PR 11-2B  Stock transaction for corporate expansion                                         ObJ.  2

Pulsar Optics produces medical lasers for use in hospitals. The accounts and their balances appear in the ledger of Pulsar Optics on April 30 of the current year as  follows:

 

Preferred 1% Stock, $120 par (300,000 shares authorized,

36,000 shares issued)  ...............................................	$ 4,320,000
Paid-In Capital in Excess of Par—Preferred Stock .......................	180,000
Common Stock, $15 par (2,000,000 shares authorized, 1,400,000  shares  issued)  ............................................	  21,000,000
Paid-In Capital in Excess of Par—Common Stock .......................	3,500,000
Retained Earnings ....................................................	78,000,000

 

At the annual stockholders’ meeting on August 5, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately $9,000,000. The plan provided (a) that the corporation borrow $1,500,000, (b) that 20,000 shares of the unissued preferred stock be issued  through  an  underwriter,  and  (c)  that  a build- ing, valued at $4,150,000, and the land on which it is located, valued at $800,000, be acquired in accordance with preliminary negotiations by the issuance of 300,000 shares of common stock. The plan was approved by the stockholders and accomplished by the following transactions:

Oct.  9. Borrowed $1,500,000 from St. Peter City Bank, giving a 4% mortgage note.

17.  Issued 20,000 shares of preferred stock, receiving $126 per share in  cash.

28. Issued 300,000 shares of common stock in exchange for land and a building, according to the plan.

Instructions

Journalize the entries to record the October transactions.