When recording the conversion of preferred stock into common stock, if the total contributed capital eliminated in regard to the preferred stock is less than the common stock par value, the difference is debited to
A) Additional Paid-in Capital on Preferred Stock.
B) Additional Paid-in Capital on Common Stock.
C) Shareholders' Equity.
D) Retained Earnings.

Question

Quizplus · Accepted Answer

The difference is debited to Retained Earnings when the total contributed capital eliminated for the preferred stock is less than the par value of the common stock issued.

When Recording the Conversion of Preferred Stock into Common Stock