Question



Required Refer to the equity section above. Assume that the preferred are convertible into common at a rate of eight common shares for each share of preferred. If 1,000 shares of the preferred are converted into common on April 1, 2014, prepare the entry and describe how this affects the equity section of the balance sheet (immediately after the conversion).
Analysis Component: If you are a common shareholder in this company, and the company plans to pay total cash dividends of $720,000, does it make any difference to you whether the conversion takes place before the dividend declaration?Why?


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  • CreatedJanuary 08, 2015
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