Acc121 Survey of Accounting: P8-4 On January 31 of the current year, Gargantuan Corp

Acc121 Survey of Accounting
P8-4 Stock transactions for corporate expansion
On January 31 of the current year, the following accounts and their balances appear in the ledger of Gargantuan Corp., a meat processor.
Preferred 3% Stock, $25 par (50,000 shares authorized, 30,000 shares issued) 750,000
Paid-in capital in excess of par - Preferred stock 90,000
Common Stock, $30 par (400,000 shares authorized, 120,000 shares issued) 3,600,000
Paid-in capital in excess of par - Common stock 300,000
Retained Earnings 5,794,000

At the annual stockholders' meetings on April 2, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately $2,550,000.
The plan provided:
a) that a building, valued at $1,200,000, and the land on which it is located, valued at $300,000, be acquired in accordance with preliminary negotiations by the issuance of 45,000 shares of common stock.
b) that 15,000 shares of the unissued preferred stock be issued through an underwriter
c) that the corporation borrow $500,000.

The plan was approved by the stockholders and accomplished by the following transactions:
June 6. Issued 45,000 shares of common stock in exchange for land and a building, according to the plan.
June 14. Issued 15,000 shares of preferred stocks, receiving $36 per share in cash.
June 30. Borrowed $500,000 from Mt Baker National Bank, giving a 7% mortgage note.
No other transactions occurred during June.

Instructions:
Illustrate the effects on the accounts and financial statements of each of the preceding transactions.
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