1. On January 1, 2015, Kelsey issued 1,000 of its $1 par value, 6% preferred stock for $3 per share. Kelsey incurred no stock issuance costs. Each share of Kelseys preferred stock can be converted into 1 share of Kelseys $2 par value common stock. On August 15, 2015, when 1 share of Kelseys common stock was trading for $5 per share, 500 shares of the preferred stock were converted into common stock. On December 31, 2015, when 1 share of Kelseys preferred stock was trading for $3.50 per share, Kelsey declared the annual cash dividend on her preferred stock. Prepare the entries Kelsey should make on:

• January 1, 2015.
• August 15, 2015.
• December 31, 2015.