Q21: Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to Share Premium Conversion Equity on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares.

The Entry to the Share Capital Preference account on the date of conversion will be for an amount of:

a. $100,000

b. $250,000

c. $25,000

d. $10,000

e. None of these answers