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Conversion of Preferred Stock into Common Stock

Groff & Sons, Inc., has 25,000 shares of $50 par value, 9 percent preferred stock and 100,000 shares of $1.00 par value common stock outstanding. The preferred stock is convertible into the company's common stock at a conversion rate of 1-to-40; that is, each share of preferred stock is convertible into 40 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
1.)	Preferred StockCommon StockAdditional Paid-in-Capital in excess of par value.
	Preferred StockCommon StockAdditional Paid-in-Capital in excess of par value.
	Additional Paid-in-Capital in excess of par value.
	To record conversion of preferred stock to common stock.