Conversion of Preferred Stock into Common Stock

Smith & Sons, Inc., has $15,000$ shares of $$100$ par value, six percent preferred stock and $80,000$ shares of $$1\mathrm{.}00$ par value common stock outstanding. The preferred stock is convertible into the company$$s common stock at a conversion rate of $1-$to$-20$; that is$,$ each share of preferred stock is convertible into $20$ shares of common stock. The preferred stock had been sold for its par value when issued. Prepare the journal entry to record the conversion of all of the company$$s preferred stock into common stock.

General Journal

Ref. Description Debit Credit

a$.$ Answer

Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

Additional Paid$-$in$-$Capital in excess of par value. Answer

$0$

Answer

$0$

To record conversion of preferred stock to common stock.