Preferred Stock Flashcards
1
Q
Under what condition is retained earnings debited on conversion of preferred stock to common stock?
A
Total recorded value of preferred is less than par value of common on conversion.
2
Q
What is the accounting treatment for the retirement of preferred stock?
A
- ) All related Owner’s Equity accounts are removed;
- ) Debit differences go to retained earnings;
- ) Credit differences go to contributed capital.
3
Q
For what amount is Preferred Stock Additional Paid in Capital debited when called or redeemed?
A
Amount recorded from original issuance
4
Q
What is the accounting treatment for the conversion of preferred stock?
A
- ) Preferred stock accounts are transferred to common stock accounts;
- ) If total preferred stock value is less than common stock par value, debit retained earnings
5
Q
Is there a gain or loss when converting preferred stock ownership to common stock?
A
No