1. Which of the following statements is not true?

Preferred dividends are tax deductible, therefore, preferred stock is similar to debt

Preferred stockholders receive dividends at a pre-specified rate.

Dividends in arrears and the current periods preferred dividend must be paid before common shareholders can receive a dividend if the preferred stock is cumulative.

Preferred stock is unlike debt because preferred stockholders receive dividends in a given year only if they are declared.

2. Toledo Corporation reacquired 2,500 shares of its common stock for $15 per share on June 1. On October 1, Toledo reissued 1,000 shares of the stock for $19 per share. Which of the following would be included in the journal entry to record the reissue of the shares?

Debit to Cash for $47,500

Credit to Treasury Stock for $37,500

Credit to Common Stock for $15,000

Credit to Additional Paid-in Capital for $4,000