E$15\mathrm{.}9($LO $1,3)($Preferred Stock Entries and Dividends$)$ Otis Thorpe Corporation has $10,000$ shares of $$100$ par value, $8\%,$ preferred stock and $50,000$ shares of $$10$ par value common stock outstand$-$ ing at December $31,2020.$

Instructions

Answer the questions in each of the following independent situations.

a$.$ If the preferred stock is cumulative and dividends were last paid on the preferred stock on Decem$-$ ber $31,2017,(1)$ what are the dividends in arrears on December $31,2020,$ and $(2)$ how should these dividends be reported?

b$.$ If the preferred stock is convertible into seven shares of $$10$ par value common stock and $4,000$ shares are converted, what entry is required for the conversion assuming the preferred stock was issued at par value?

c$.$ Ifthepreferredstockwasissuedat$$107$pershare,howshouldthepreferredstockbereportedinthe stockholders$$ equity section?