(6) Why does the company have preferred stock outstanding? (7) Based on information provided in PepsiCo's Consolidated Statement of Equity (Exhibit 5), its preferred stock account was affected by three separate events during 2018, including the redemption, conversion, and retirement. Please complete the following journal entries made by PepsiCo to record these events. (Hint: The account of Repurchased Preferred Stock is essentially the account of Treasury stock we cover in class.) (a) Repurchased Preferred Stock Cash (a) Preferred Stock Common Stock at par 0 million (d) (c) Preferred Stock (f) Repurchased Preferred Stock Exhibit 5 Shareholders' Equity at PepsiCo Consolidated Statement of Equity (in millions) 2018 2017 2016 Shares Amount Shares Amount Shares Amount $ $ 0.8 (0.1) (0.7) 41 (6) 0.8 - 410.8 $ - - - 41 0.8 41 - - 41 (35) 0.8 (0.7) (192) (186) (0.7) - (0.7) - (6) (197) (2) 199 0.7 (0.7) (197) (0.7) (192) 1,420 24 1,428 24 1,448 24 1 (12) 1,409 - - (1) (8) 231,420 - 24 (20) 1,428 24 Preferred Stock Balance, beginning of year Conversion to common stock Retirement of preferred stock Balance, end of year Repurchased Preferred Stock Balance, beginning of year Redemptions Retirement of preferred stock Balance, end of year Common Stock Balance, beginning of year Share issued in connection with preferred stock conversion to common stock Change in repurchased common stock Balance, end of year Capital in Excess of Par Value Balance, beginning of year Share-based compensation expense Equity issued in connection with preferred stock conversion to common stock Stock option exercises, RSUS, PSUs and PEPunits converted (4) Withholding tax on RSUS, PSUs and PEPunits converted Other Balance, end of year Retained Earnings Balance, beginning of year Cumulative effect of accounting changes Net income attributable to PepsiCo Cash dividends declared - common (b) Cash dividends declared - preferred Retirement of preferred stock Balance, end of year Accumulated Other Comprehensive Loss Balance, beginning of year Other comprehensive (loss)/income attributable to PepsiCo Balance, end of year 3,996 250 4,091 290 4,076 289 (193) (236) (145) (138) (130) (103) 3,953 3,996 4,091 52,518 50,472 52,839 (145) 12,515 (5,098) 4,857 (4,536) - 6,329 (4,282 (164) 59,947 52,839 52,518 (13,057) (2,062) (15,119) (13,919) 862 (13,057) (13,319) (600 (13,919 (6) Why does the company have preferred stock outstanding? (7) Based on information provided in PepsiCo's Consolidated Statement of Equity (Exhibit 5), its preferred stock account was affected by three separate events during 2018, including the redemption, conversion, and retirement. Please complete the following journal entries made by PepsiCo to record these events. (Hint: The account of Repurchased Preferred Stock is essentially the account of Treasury stock we cover in class.) (a) Repurchased Preferred Stock Cash (a) Preferred Stock Common Stock at par 0 million (d) (c) Preferred Stock (f) Repurchased Preferred Stock Exhibit 5 Shareholders' Equity at PepsiCo Consolidated Statement of Equity (in millions) 2018 2017 2016 Shares Amount Shares Amount Shares Amount $ $ 0.8 (0.1) (0.7) 41 (6) 0.8 - 410.8 $ - - - 41 0.8 41 - - 41 (35) 0.8 (0.7) (192) (186) (0.7) - (0.7) - (6) (197) (2) 199 0.7 (0.7) (197) (0.7) (192) 1,420 24 1,428 24 1,448 24 1 (12) 1,409 - - (1) (8) 231,420 - 24 (20) 1,428 24 Preferred Stock Balance, beginning of year Conversion to common stock Retirement of preferred stock Balance, end of year Repurchased Preferred Stock Balance, beginning of year Redemptions Retirement of preferred stock Balance, end of year Common Stock Balance, beginning of year Share issued in connection with preferred stock conversion to common stock Change in repurchased common stock Balance, end of year Capital in Excess of Par Value Balance, beginning of year Share-based compensation expense Equity issued in connection with preferred stock conversion to common stock Stock option exercises, RSUS, PSUs and PEPunits converted (4) Withholding tax on RSUS, PSUs and PEPunits converted Other Balance, end of year Retained Earnings Balance, beginning of year Cumulative effect of accounting changes Net income attributable to PepsiCo Cash dividends declared - common (b) Cash dividends declared - preferred Retirement of preferred stock Balance, end of year Accumulated Other Comprehensive Loss Balance, beginning of year Other comprehensive (loss)/income attributable to PepsiCo Balance, end of year 3,996 250 4,091 290 4,076 289 (193) (236) (145) (138) (130) (103) 3,953 3,996 4,091 52,518 50,472 52,839 (145) 12,515 (5,098) 4,857 (4,536) - 6,329 (4,282 (164) 59,947 52,839 52,518 (13,057) (2,062) (15,119) (13,919) 862 (13,057) (13,319) (600 (13,919