Essay
Sea Star Company has preferred stock with a par value of $15 that is convertible into common stock at the ratio of 1 to 1. The common stock has a par value of $8. The following table presents the components of stockholders' equity for Sea Star Company:
A. How many shares of common stock were sold during the year and at what price?
B. How many shares of preferred stock were converted this year?
C. Why would a company offer a conversion privilege?
D. List two reasons a shareholder might exercise the conversion privilege.
Correct Answer:

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A. $112,000 / $8 = 14,000 shares; [$112,...View Answer
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