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 (230,000 shares authorized, 87,000 shares issued)	$4,350,000
Paid-In Capital in Excess of Par—Preferred Stock	522,000
Common Stock, $30 par (1,000,000 shares authorized, 397,000shares issued)	11,910,000
Paid-In Capital in Excess of Par—Common Stock	1,191,000
Retained Earnings	155,490,000

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 $3,314,000, and the land on which it is located, valued at $902,000, be acquired in accordance with preliminary negotiations by the issuance of 124,000 shares of common stock, (b) that 40,700 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow $3,850,000. The plan was approved by the stockholders and accomplished by the following transactions:

May 11	Issued 124,000 shares of common stock in exchange for land and a building, according to the plan.
20	Issued 40,700 shares of preferred stock, receiving $53 per share in cash.
31	Borrowed $3,850,000 from Laurel National, giving a 4% mortgage note.

CHART OF ACCOUNTS Latte Corp. General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Inventory
145	Office Supplies
151	Prepaid Insurance
181	Land
191	Building
192	Accumulated Depreciation-Building

	LIABILITIES
210	Accounts Payable
221	Notes Payable
226	Interest Payable
231	Cash Dividends Payable
241	Salaries Payable
261	Mortgage Note Payable

	EQUITY
236	Stock Dividends Distributable
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

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods 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
710	Interest Expense

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

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8
9

Answer rating: 100% (QA)

Solution DATE ACCOUNTS EXPLANATION DEBIT CREDIT MAY 11 LAND AC 3314000 BUILDING AC 90... View the full answer