1 D. Cr. common stock $100,000 1,000 shares of 6%, $100 par convertible preferre

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D. Cr. common stock $100,000

1,000 shares of 6%, $100 par convertible preferred stock were issued at $105 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. Dr. preferred stock $105,000 B. Dr. retained earnings $1,500 C. Cr. paid-in capital in excess of par, common $100,000

D. Cr. common stock $100,000

At December 31, 20X4 and 20X5, Apex Co. had 5,000 shares of $100 par, 7% cumulative preferred stock outstanding. No dividends were in arrears as of December 31, 20X3. Apex did not declare a dividend during 20X4. During 20X5, Apex paid a cash dividend of $56,000 on its preferred stock. Apex should report dividends in arrears in its 20X5 financial statements as a(an) A. Accrued liability of $70,000 B. Disclosure of $14,000 C. Accrued liability of $14,000 D. Disclosure of $56,000

Explanation / Answer

1) journal Entry to record conversion is Debit Credit preferred stock (1000*100) 100000 paid in capital in excess of par (1000*5) 5000 common stock (1000*20*5) 100000 paid in capital in excess of par 5000 hence the correct option is D. CR common stock 100,000 2) dividend in arrear 2014 (5000*100*7%)= 35000 dividend for year 2015 35,000 total 70000 less cash dividend paid in 2015 -56,000 Arrear 14000 answer ) option B Disclosure of $14,000 3) stock dividend =4000*35%= 1400 shares stock dividend (1400*12) 16800 common stock (1400*2) 2,800 paid in capital in excess of par (1400*10) 14,000 option d) common stock is credited for $2,800

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