How Do You Account For A Retained Earnings Statement For Preferred Stock?
Preferred stock–stock which receives dividends before common stock–has no voting rights. The major types of preferred stock include cumulative, callable, and convertible. Cumulative preferred stock is stock which will always receive dividends, even if a company withholds dividends one year; callable preferred stock is stock the company may buy back at a future date at a set price; and convertible preferred stock is stock the owner can convert into common stock, usually receiving two or more shares for one share of preferred stock. Debit cash and credit preferred stock if the company issued preferred stock at par value. Par value is the face value of the stock. If the company issued preferred stock above par value, you should debit cash, credit preferred stock at its par value, and credit additional paid in capital the difference between cash received and preferred stock at par value. The cash received is the amount paid for the preferred stock; the value of the preferred stock at par
