Otis Thorpe Corporation has 10,740 shares of $100 par value, 6% preferred stock and 52,000 shares of $10 par value common stock outstanding at December 31, 2014. 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 1, 2011, what are the dividends in arrears that should be reported on the December 31st, 2014, balance sheet?)
How should these dividends be reported? - reported or not reported as a liability?
b. If the preferred stock is convertible into 8 shares of $10 par value common stock and 4,500 shares are converted, what entry is required for the conversion assuming the preferred stock was issued at par value? 3 entries
c. If the preferred stock was issued at $107 per share, how should the preferred stock be reported in the stockholders equity section? 3 entries