1-1. On 1/1/19, Everwood Co. issues 10,000 shares of £10 par value convertible preference shares for £12 cash per share. Each share is convertible into 4 ordinary shares. On this date the £1 par value ordinary shares are selling for £3 per share. Approximately 2 years later, Everwood’s shareholders convert their preference shares into ordinary shares. On the date of conversion the preference shares are selling for £16 and the ordinary shares are selling for £5 per share. The journal entry on 1/1/19 will include which of the following?
a. Credit Share Capital—Preference £20,000.
b. Credit Share Premium—Ordinary £20,000.
c. Credit Share Capital—Preference £100,000.
d. Debit Share Premium—Ordinary £20,000.
