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Conversion of Preferred Stock into Common Stock Smith & Sons, Inc., has 20,000 shares of $100 par value, six percent preferred stock and 80,000 shares of $0.50 par value common stock outstanding. The preferred stock is convertible into the company's common stock at a conversion rate of 1-to-20; that is, each share of preferred stock is convertible into 20 shares of common stock. The preferred stock had been sold for its par value when issued. Prepare the journal entry to record the conversion of all of the company's preferred stock into common stock. General Journal Ref. a Preferred Stock Description Common Stock Additional Paid-in-Capital in excess of par value. To record conversion of preferred stock to common stock. + Debit $ 2,000,000 $ 0 0 Credit

Conversion of Preferred Stock into Common Stock Smith & Sons, Inc., has 20,000 shares of $100 par value, six percent preferred stock and 80,000 shares of $0.50 par value common stock outstanding. The preferred stock is convertible into the company's common stock at a conversion rate of 1-to-20; that is, each share of preferred stock is convertible into 20 shares of common stock. The preferred stock had been sold for its par value when issued. Prepare the journal entry to record the conversion of all of the company's preferred stock into common stock. General Journal Ref. a Preferred Stock Description Common Stock Additional Paid-in-Capital in excess of par value. To record conversion of preferred stock to common stock. + Debit $ 2,000,000 $ 0 0 Credit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Conversion of Preferred Stock into Common Stock Smith & Sons, Inc., has 20,000 shares of $100 par value, six percent preferred stock and 80,000 shares of $0.50 par value common stock outstanding. The preferred stock is convertible into the company's common stock at a conversion rate of 1-to-20; that is, each share of preferred stock is convertible into 20 shares of common stock. The preferred stock had been sold for its par value when issued. Prepare the journal entry to record the conversion of all of the company's preferred stock into common stock. General Journal Ref. a Preferred Stock Description Debit + $ 2,000,000 $ + Common Stock Additional Paid-in-Capital in excess of par value. To record conversion of preferred stock to common stock. 0 0 Credit
Transcribed Image Text:Conversion of Preferred Stock into Common Stock Smith & Sons, Inc., has 20,000 shares of $100 par value, six percent preferred stock and 80,000 shares of $0.50 par value common stock outstanding. The preferred stock is convertible into the company's common stock at a conversion rate of 1-to-20; that is, each share of preferred stock is convertible into 20 shares of common stock. The preferred stock had been sold for its par value when issued. Prepare the journal entry to record the conversion of all of the company's preferred stock into common stock. General Journal Ref. a Preferred Stock Description Debit + $ 2,000,000 $ + Common Stock Additional Paid-in-Capital in excess of par value. To record conversion of preferred stock to common stock. 0 0 Credit
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