Pulsar Optics produces medical lasers for use in hospitals. The accounts and their bal-ances 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).....Paid-In Capital in Excess of Par-Preferred Stock .....Common Stock, $15 par (2,000,000 shares authorized,1,400,000 shares issued)....$ 4,320,000180,00021,000,000Paid-In Capital in Excess of Par-Common Stock...Retained Earnings3,500,00078,000,000At the annual stockholders' meeting on August 5, the board of directors presented aplan 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 ofthe unissued preferred stock be issued through an underwriter, and (c) that a building,valued at $4,150,000, and the land on which it is located, valued at $800,000, be acquiredin accordance with preliminary negotiations by the issuance of 300,000 shares of com-mon stock valued at $16.50 per share. The plan was approved by the stockholders andaccomplished 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.InstructionsJournalize the entries to record the October transactions.

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Asked Dec 19, 2019
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Pulsar Optics produces medical lasers for use in hospitals. The accounts and their bal-
ances 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).....
Paid-In Capital in Excess of Par-Preferred Stock .....
Common Stock, $15 par (2,000,000 shares authorized,
1,400,000 shares issued)....
$ 4,320,000
180,000
21,000,000
Paid-In Capital in Excess of Par-Common Stock...
Retained Earnings
3,500,000
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 building,
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 com-
mon stock valued at $16.50 per share. 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.
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Pulsar Optics produces medical lasers for use in hospitals. The accounts and their bal- ances 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)..... Paid-In Capital in Excess of Par-Preferred Stock ..... Common Stock, $15 par (2,000,000 shares authorized, 1,400,000 shares issued).... $ 4,320,000 180,000 21,000,000 Paid-In Capital in Excess of Par-Common Stock... Retained Earnings 3,500,000 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 building, 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 com- mon stock valued at $16.50 per share. 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.

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Expert Answer

Step 1

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend.

Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.

Par value: It refers to the value of a stock that is stated by the corporation’s charter. It is also known as face value of a stock.

 Issue of common stock for non cash assets or services: Corporations often issue common stock for the services received from attorneys or consultants as compensation, or for the purchase of non cash assets such as land, buildings, or equipment.

Step 2

Record the borrowed amount of $1,500,000 in exchange of mortgage note.

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Account Titles and Explanation Date Debit ($) Credit ($) October 9 Cash 1,500,000 Mortgage note payable (To record issuance of mortgage note for the amount of borrowings 1,500,000

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Step 3

Record the issuance of preferred stock...

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Account Titles and Explanation Date Debit (S) Credit (S) October Cash (20,000 shares x $126) 17 2,520,000 Preferred Stock (20,000 shares x $120) Paid-in Capital in Excess of Par value - Preferred stock (Balancing figure) (To record issuance of 20,000 shares in excess of par value) 2,400,000 120,000

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