In 2017, Sheffield Corp., issued for $102 per share, 97000 shares of $100 par value convertible...
In 2017, Sheffield Corp., issued for $102 per share, 97000
shares of $100 par value convertible preferred stock. One share of
preferred stock can be converted into three shares of Sheffield's
$20 par value common stock at the option of the preferred
stockholder. In August 2018, all of the preferred stock was
converted into common stock. The market value of the common stock
at the date of the conversion was $25 per share. What total amount
should be credited to additional paid-in capital from common stock
as a result of the conversion of the preferred stock into common
stock?
| $4074000. |
| $3880000. |
| $3084000. |
| $2619000. |
Homework Answers
Answer: $4074000.
Explanation
The preferred stock's par value and any additional paid-in capital is transferred to Common Stock and Additional Paid-in Capital when preferred stock is converted = 97,000 shares x $102 - (97,000 shares × 3 × $20)
= $9,894,000 - $5,820,000
= $4,074,000
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