Answer:
See Explanation
Explanation:
1. Prepare the January 2, 2016, journal entry to record the issuance of the preferred stock.
The following entries are needed..
1. Cash
..... Preferred Stock
......Additional Paid-in capital for preferred stock
The entries are calculated as follows
Cash = 900 * $117 = $105,300
Preferred Stock = $100 par * 900 = $90,000
Additional Paid-in capital for preferred stock =$105,300 - $90,000 = $15,300
The entries are as follows
Cash ------- $105,300
Preferred Stock --------- $90,000
Additional Paid-in capital for preferred stock ------- $15,300
2a.
The entries are as follows
Preferred Stock
Additional Paid-in capital on preferred stock
Common stock
Additional Paid-in capital on preferred stock conversion
The entries are calculated as follows;
Preferred Stock = $100 par * 900 = $90,000
Additional Paid-in capital for preferred stock =$105,300 - $90,000 = $15,300
Common Stock = $7 par * 900 * 10 = $63,000
Additional Paid-in capital on preferred stock conversion =$105,300 - $63,000 = $42,300
The entries are as follows
Preferred Stock --------- $90,000
Additional Paid-in capital for preferred stock ------- $15,300
Common Stock ---------- $63,000
Additional Paid-in capital on preferred stock conversion -------- $42,300
b.
The entries are as follows
Preferred Stock
Additional Paid-in capital on preferred stock
Retained Earnings
Common stock
The entries are calculated as follows;
Preferred Stock = $100 par * 900 = $90,000
Additional Paid-in capital for preferred stock =$105,300 - $90,000 = $15,300
Common Stock = $12 par * 900 * 10 = $108,000
Retained Earnings =$108,000 - $90,000 - $15,300 = $2,700
The entries are as follows
Preferred Stock --------- $90,000
Additional Paid-in capital for preferred stock ------- $15,300
Retained Earnings = $2,700
Common Stock ---------- $108,000
