Kari Corporation issued 5,000, $4 cumulative preferred shares at $80 each and 10,000 common shares at $18 each at the beginning of 2022. Each preferred share is convertible into four common shares. The appropriate preferred share dividend was declared and paid in 2022. During the years 2023 and 2024, the following transactions affected Kari Corporation’s shareholders’ equity accounts:

2023 

Jan. 10 Declared and paid $12,000 of annual dividends to preferred shareholders. 

2024 

Jan. 10 Declared and paid annual dividend to preferred shareholders and a $4,000 dividend to common shareholders. 

Mar. 1 The preferred shares were converted into common shares. 

Instructions 

a. Journalize each of the 2023 and 2024 transactions. 

b. Are there any additional reporting requirements regarding preferred share dividends in either 2023 or 2024? 

c. After the preferred shares are converted, what is the total number of common shares issued? 

What are retractable preferred shares and how do they compare with convertible preferred shares?