10 E15-B (L01,2) (Correcting Entries for Equity Transactions) Pistons Inc. recently hired a new accountant with extensive experi- ence in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation's capital stock. CORRECTED JE May 2 Cash 192,000 Capital Stock 192,000 (Issued 12,000 shares of $5 par value common stock at $16 per share) Cash 600,000 Capital Stock 600,000 (Issued 10.000 shares of $30 par value preferred stock at $60 per share) 15 Capital Stock 15.000 Cash 15,000 (Purchased 1,000 shares of common stock for the treasury at $15 per share) Cash 8.500 Capital Stock 5,000 Gain on Sale of Stock 3,500 (Sold 500 shares of treasury stock at $17 per share) 215-(L01,3) (Preferred Stock Entries and Dividends) Otis Thorpe Corporation has 10,000 shares of $100 par value, 5%, preferred stock and 50,000 shares of $10 par value common stock outstanding at December 31, 2017 Instructions Answer the questions in each of the following independent situations. (a) If the preferred stock is cumulative and dividends were last paid on the preferred stock on December 31, 2014. what are the dividends in arrears that should be reported on the December 31, 2017, balance sheet? How should these dividends be reported? (b) If the preferred stock is convertible into seven shares of $10 par value common stock and 4,000 shares are converted, what entry is required for the conversion assuming the preferred stock was issued as par value (d) If the preferred stock was issued at $107 per share, how should the preferred stock be reported in the stockholders equity section? (a) (c) (b)