A company issues 7000 shares of its 10 par value common

Question

Question: 1. Increasing the return to common stockholders by issuing preferred stock is an example of

(a) Financial leverage.

(b) Cumulative earnings.

(c) Dividend in arrears.

2. A company issues 7,000 shares of its $10 par value common stock in exchange for equipment valued at $105,000. The entry to record this transaction includes a credit to

(a) Paid-In Capital in Excess of Par Value, Common Stock, for $35,000.

(b) Retained Earnings for $35,000.

(c) Common Stock, $10 Par Value, for $105,000.