1) A company has outstanding 11.00 million shares of $3.00 par common stock and 2.4 million shares of $7.00 par preferred stock. The preferred stock has an 8% dividend rate. The company declares $480,000 in total dividends for the year. Which of the following is correct if the preferred stockholders only have a current dividend preference?

Preferred stockholders will receive the entire $480,000, and they must also be paid $80,000 before the end of the current accounting period. Common stockholders will receive nothing.

Preferred stockholders will receive the entire $480,000, and they must also be paid $80,000 sometime in the future before common stockholders will receive anything.

Preferred stockholders will receive $38,400 or 8% of the total dividends. Common stockholders will receive the remaining $441,600.

Preferred stockholders will receive the entire $480,000, but will receive nothing more relating to this dividend declaration. Common stockholders will receive nothing.

2) A company issues 1.09 million shares of preferred stock with a par value of $6.50 at its market price of $30.50 per share. The issuance should be recorded with a debit to Cash for:

$26.16 million, a credit to Additional Paid-in Capital for $7.09 million, and a credit to Preferred Stock for $33.25 million.

$33.25 million, a credit to Preferred Stock for $7.09 million, and a credit to Additional Paid-in Capital for $26.16 million.

$33.25 million and a credit to Preferred Stock for $33.25 million.

$7.09 million and a credit to Preferred Stock for $7.09 million.