Question

Bramble Corporation issued 1,900 shares of $10 par value common stock upon conversion of 950 shares of $50 par value preferred stock. The preferred stock was originally issued at $60 per share. The common stock is trading at $24 per share at the time of conversion.

Record the conversion of the preferred stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation Debit Credit

Answer 1

Preferred stock = 950 x $50 =

paid in capital in excess of par preferred stock = 950 x ($60 - $50) = $9500

Common stock = 1900 x $10 = $19000

Therefore,

journal entry:

Account title	Debit	Credit
Preferred stock paid in capital in excess of par - preferred stock Common stock paid in capital in excess of par - common stock (bal.fig)	$47500 $9500 . .	. . $19000 $38000