1. Dream Thrum Inc. began operations in 2016. On 1/1/2016, the company issued 25,000 shares of 10%, $1 par value preferred stock and 70,000 shares of common stock. The company was not able to pay dividends in 2016, 2017, or 2018. However, in 2019, the company declared it will pay dividends to shareholders totaling $50,000. Assuming the preferred stock is cumulative, how much of the $50,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2019?

$2,500 to preferred stockholders and $47,500 to common stockholders.

$25,000 to preferred stockholders and $25,000 to common stockholders.

$50,000 to preferred stockholders and $0 to common stockholders.

$0 to preferred stockholders and $50,000 to common stockholders.

$10,000 to preferred stockholders and $40,000 to common stockholders.

2. On October 1, 2020, Top of the World purchases equipment for $28,000 in cash. The equipment has an expected useful life of four years and has no salvage value. The firm uses straight-line depreciation method. What adjusting entry should the company record on December 31, 2021? Assume the company uses an annual accounting period and makes all adjusting entries on December 31^st.

Debit Depreciation Expense and credit Cash for $28,000.

Debit Depreciation Expense and credit Accumulated Depreciation for $7,000.

Debit Depreciation Expense and credit Equipment for $1,750.

Debit Depreciation Expense and credit Accumulated Depreciation for $1,750.

None of the answers given are correct.