Textbook Problem

Stock transaction for corporate expansion

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 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 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.