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Problem 14-2A
Corporate expansion ;
Stockholders equity section of balance sheet
On January 1 of the current year,the following accounts and their balances appear in the ledger of
medallion Corp, a meat processor :
Preferred $9 Stock, $100 par (10.000 shares authorized, 5.000 shared issues)
Paid-In Capital in Excess of Par-Preferred Stock
Common Stock, $20 par (100.000 shares authorized, 75.000 shares issued)

500.000
80.000
1.500.000

Paid-In Capital in Excess of Par-Common Stock

125.000

Retained Earnings

505.000

At the annual stockholders meeting on February 11, the board of directors presented a plan for
modernizing and expanding plant operations at accost of approximately $600.000. the plan provided (a)
that the corporation borrow $175.000, (b) that 1.000 shares of the unissued preferred stock be issued
through an underwriter, and (c) that a building, valued at $280.000, and the land on which it is located,
valued at $50.000, be acquired in accordance with preliminary negotiations by the issuance of $15.000
shares of common stock. The plan was approved by the stockholders and accomplished by the following
transactions:
Mar. 3. Issued 15.000 shares of common stock in exchange for land and a building, according to the
plan.
15. Issued 1.000 shares of preffered stock, receiving $105 per share in cash from the underwriter.
31. Borrowed $175.000 from Highland National Bank, giving a 12% mortgage note.
No other transactions occurred during March.
Instructions
1. Journalize the entries to record the foregoing transactions.
2. Prepare the Stockholders Equity section of the balance sheet as of March 31.

3 march. issued 15.000 shares of common stock in exchange for land and a building, according
to the plan
Dr Building $ 280,000
Dr Land
50,000
Cr Common Stock
$ 300,000 (20 par value x 15,000)
Cr Paid-In Capital in Excess of Par--Common Stock 30,000
21 march. Issued 1,000 shares of preferred stock, receiving 105 per share in cash
Dr Cash $ 105,000
Cr Preferred Stock
$100,000 (100 par value x 1,000)
Cr Paid-In Capital in Excess of Par--Preferred Stock
5,000
31 march. Borrowed 175,000 from whitefish national bank giving a 12% mortgage note.
Dr Cash $ 175,000
Cr Notes Payable $ 175,000

Stockholders Equity
Paid in capital :
Preferred 9%stock, $100 par
(Preferred $9 Stock, $100 par (10.000 shares authorized,

$ 500,000

5.000 shared issues)

Excess of issue price over par-preferred stock

$ 85,000
$ 585,000

Common Stock, $20 par (100.000 shares authorized,

75.000 shares issued)
Excess of issue price over par-common stock

$ 1.500.000
$

30,000
$ 1,530,000

Total paid in capital

$2,115,000

Notes payable

$ 175,000

Retained earnings

$ 505,000

Total

$2,795,000