pr13 2a sheldon optics produces medical lasers for use in hospitals the accounts and 500771

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.