In 2017, Swifty Corporation, issued for $103 per share, 92500 shares of $100 par value convertible...
In 2017, Swifty Corporation, issued for $103 per share, 92500
shares of $100 par value convertible preferred stock. One share of
preferred stock can be converted into three shares of Swifty's $20
par value common stock at the option of the preferred stockholder.
In August 2018, all of the preferred stock was converted into
common stock. The market value of the common stock at the date of
the conversion was $25 per share. What total amount should be
credited to additional paid-in capital from common stock as a
result of the conversion of the preferred stock into common
stock?
| $3977500. |
| $2987500. |
| $3700000. |
| $2590000. |
Homework Answers
A. $3977500.
The preferred stock's par value and any additional paid-in capital is transferred to Common Stock and Additional Paid-in Capital when preferred stock is converted: $9,527,500 - (92,500 × 3 × $20) = $3,977,500
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