During the year, Salem, Inc. had several stockholders' equity transactions, which are summarized in the following table. Preferred stock has a par value of $75 and is convertible into common stock at the ratio of 1:1. The common stock has a par value of $5.

a. How many shares of common stock did Salem sell during the year and at what price per share?
b. How many shares of preferred stock were converted during the year?
c. Why would a company such as Salem offer a conversion feature on preferred stock?
d. Why would a shareholder exercise the conversion privilege?
e. What dividends did Salem pay during the year?

Question

During the year, Salem, Inc. had several stockholders' equity transactions, which are summarized in the following table. Preferred stock has a par value of $75 and is convertible into common stock at the ratio of 1:1. The common stock has a par value of $5.
  
a. How many shares of common stock did Salem sell during the year and at what price per share?
b. How many shares of preferred stock were converted during the year?
c. Why would a company such as Salem offer a conversion feature on preferred stock?
d. Why would a shareholder exercise the conversion privilege?
e. What dividends did Salem pay during the year?

Quizplus · Accepted Answer

The Answer of During the year, Salem, Inc. had several stockholders' equity transactions, which are summarized in the following table. Preferred stock has a par value of $75 and is convertible into common stock at the ratio of 1:1. The common stock has a par value of $5.
  
a. How many shares of common stock did Salem sell during the year and at what price per share?
b. How many shares of preferred stock were converted during the year?
c. Why would a company such as Salem offer a conversion feature on preferred stock?
d. Why would a shareholder exercise the conversion privilege?
e. What dividends did Salem pay during the year?

During the Year, Salem, Inc