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500 shares of 6%, $100 par convertible preferred stock were issued at $103 per share. Each share is convertible into 20 shares of $5 par common stock. The journal entry to record conversion includes which of the following?a) Cr. paid in capital in excess of par, common $1,500.b) Dr. retained earnings $1,500.c) Dr. preferred stock $51,500.d) Cr. common stock $51,500

Respuesta :

Answer:

correct option is a.)  Cr. paid in capital in excess of par, common $1,500

Explanation:

given data

share = 500

rate = 6%

preferred stock = $100 par convertible

per share = $103

convertible share = 20 shares

par common stock = $5

solution

we know here equity isue is

equity issue = 500 × 20× 5 = 50000

and

preferred share holder will be

preferred share holder  = 100 × 103 = 51500

so

paid in excess of par is

paid in excess of par = 51500 - 50000

paid in excess of par = 1500

so correct option is here a.) Cr. paid in capital in excess of par common $1,500

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