Otis Thorpe Corporation has 10,000 shares of $100 par value, 8%, preferred stock and 50,000 shares of $10 par value common stock outstanding at December 31, 2025. 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 December 31, 2022, what are the dividends in arrears on December 31, 2025? The amount of dividends in arrears on the December 31, 2025 $ How should these dividends be reported? The cumulative dividend is as a liability. (b) If the preferred stock is convertible into 7 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? (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Otis Thorpe Corporation has 10,000 shares of $100 par value, 8%, preferred stock and 50,000 shares of $10 par value common stock
outstanding at December 31, 2025.
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 December 31, 2022, what are the
dividends in arrears on December 31, 2025?
The amount of dividends in arrears on the December 31, 2025 $
How should these dividends be reported?
The cumulative dividend is
as a liability.
(b) If the preferred stock is convertible into 7 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? (List all debit entries before credit entries. Credit
account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the
account titles and enter O for the amounts.)
Account Titles and Explanation
Debit
Credit
Transcribed Image Text:Otis Thorpe Corporation has 10,000 shares of $100 par value, 8%, preferred stock and 50,000 shares of $10 par value common stock outstanding at December 31, 2025. 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 December 31, 2022, what are the dividends in arrears on December 31, 2025? The amount of dividends in arrears on the December 31, 2025 $ How should these dividends be reported? The cumulative dividend is as a liability. (b) If the preferred stock is convertible into 7 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? (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit
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