Question

Pina Corporation issued 10,500 shares of $2 par value common stock upon conversion of 2.100 shares of $100 par value preferred stock. The preferred stock was originally issued at $107 per share. The common stock is trading at $25 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 for the amounts.) Debit Credit Account Titles and Explanation

Answer 1

Account titles and explanation	Debit	Credit
Preferred stock	210000
Paid in capital in excess of par - preferred stock	14700
Common stock		21000
Paid in capital in excess of par - common stock (bal.fig)		203700

Explanation:

Common stock = 10500 shares x $2 = $21000

Preferred stock = 2100 shares x $100 = $210000

Additional Paid.in Preferred stock = 2100 shares x $ (107-100) = $ 14700

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