Convertible Preferred Stock
Stockholders’ equity for Yuri Co. on December 31 was as follows:
|
Preferred stock, $15 par, 30,000 shares issued and outstanding |
$ 450,000 |
|
Paid in capital in excess of par—preferred stock |
90,000 |
|
Common stock, $10 par, 150,000 shares issued and outstanding |
1,500,000 |
|
Paid in capital in excess of par—common stock |
750,000 |
|
Retained earnings |
1,450,000 |
Preferred stock is convertible into common stock.
Provide the entry made on Yuri Co.’s books assuming that 4,000 shares of preferred are converted under each assumption listed:
1. Preferred shares are convertible into common on a share for share basis.
2. Each share of preferred stock is convertible into 4.0 shares of common.
3. Each share of preferred stock is convertible into 1.5 shares of common.