Sheldon Optics produces medical lasers for use in hospitals. The accounts and their balances appear in the ledger of Sheldon optics on October 31 of the current year as follows: Preferred 2% stock, $80 par (50000 shares authorized 25000 shares issued) $2,000,000
Paid in capital in excess of par-preferred stock $75,000
Common stock, $100 par (500,000 shares authorized, 50,000 shares issued) $5,000,000
Paid in Capital in excess of par common stock $600,000
Retained earnings $16,750,000
At the annual stockholders meeting on December 7, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approx $5,300,000.
The plan provided (a) that the corporation borrow $2,000,000, (b) that 15,000 shares of the unissued preferred stock be issued through an underwriter, and (c) that a building, valued at $ 1,850,000, and the land which it is located, valued at $162,500, be acquired in accordance with preliminary negotiations by the issuance of 17,500 shares of common stock. The plan was approved by the stockholders and accomplished by the following transactions: Jan 10. Borrowed $2,000,000 from Whitefish National Bank, giving a 7% mortgage note. Jan 21. Issued 15,000 shares of preferred stock, receiving $84.50 per share in cash. Jan 31. Issued 17,500 shares of common stock in exchange for land and a building, according to the plan. No other transaction occurred in January.
Instructions: Journalize the entries to record the forgoing transactions.
File name: Sheldon-Optics-produces.xls File type: application/vnd.ms-excel Price: $4
