In 2016, Algiers Inc

question 56

Multiple Choice

In 2016, Algiers Inc.issued 10,000 no par value convertible preferred shares for $103 each.One preferred share can be converted into three shares of Algiers' no par value common shares at the option of the shareholder.In August 2017, all of the preferred shares were converted into common shares.The market value of the common shares at the date of the conversion was $30 per share.What amount should be credited to Common Shares as a result of this conversion?

• A)$ 300,000
• B)$ 500,000
• C)$ 900,000
• D)$1,030,000

---

Definitions:

Legal Entity

A legal entity is an organization that has legal rights and obligations, including the ability to enter into contracts and loans, sue and be sued, and is required to pay taxes.

Authorized Stock

The upper limit of shares a corporation is allowed to issue, according to its founding documents.

Par Value

The nominal or face value of a stock or bond, as stated by the issuing company.

Common Stock

A type of security that represents ownership in a corporation, entitling the holder to vote on corporate matters and receive dividends.