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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
Convertible Preferred Stock On January 2, 2019, Bray Corporation issues 900 shares of $100 par convertible preferred stock for $117 per share. On January 7, 2020, all the preferred shareholders convert their shares to common stock.
Required:
- 1. Prepare the January 2, 2019, journal entry to record the issuance of the preferred stock.
- 2. Prepare the January 7, 2020, journal entry to record the conversion, assuming the preferred stock contract states that:
- a. each share of preferred stock is convertible into 7 shares of $10 par common stock
- b. each share of preferred stock is convertible into 12 shares of $10 par common stock
1.
Prepare a journal entry to record the issuance of the preferred stock.
Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.
Prepare a journal entry to record the issuance of the preferred stock:
| Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) |
|
January 02,2019 | Cash | Â | 105,300 | Â |
| Â Â Â Â Preferred Stock, 100 par |
2 (a)
Prepare a journal entry to record the conversion of preferred stock into 7 shares of common stock, $10 par.
2 (b)
Prepare a journal entry to record the conversion of preferred stock into 12 shares of common stock, $10 par.
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