stockholders\' equity for Channa Co. on Dec. 31 was as follows: Preferred stock,

Question

stockholders' equity for Channa Co. on Dec. 31 was as follows:

Preferred stock,$14 par, 25,000 shares issued and outstanding $350,000

PIC-P/S $100,000

C/S, $9 par, 125,000 shares issued and outstanding $1,125,000

PIC-c/s $875,000

R/E $1,600,000

Preferred stock is convertible into coomon stock.

Provided the entry made on Channa Co.'s books assuming that 6,000 shares for preferred are converted under each assumption listed:

1. Preferred shares are convertible into common on a share-to-share basis.

2. Each share of preferred stock is convertible into 4.0 shares of common.

3. Each share of preferred stock is convertible into 1.5 shares of common.

Explanation / Answer

Journal 1 Preference share capital 84000 Additional paid in capital 24000 To Common Stock 54000    To Retained Earnings 54000 2 Preference share capital 84000 Additional paid in capital 24000 Retained earnings 108000 To Common Stock 216000 3 Preference share capital 84000 Additional paid in capital 24000 To Common Stock 81000    To Retained Earnings 27000

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