1.The Borio Company had an asset with an $8 book value and a $7 market value; it decided to distribute the asset as a property dividend. Journal entries were made to adjust the property to market value and declare the dividend. Indicate the combined effect on the Net Income and Retained Earnings, respectively:

Select one:

a.Decrease, Decrease

b.No Effect, Decrease

c.No Effect, Increase

d.Decrease, Increase

e.Increase, Decrease

2.A company grants its executives stock options as a form of compensation. The company correctly determines the fair value of the options. During the service period (expected period of benefit for the company), the company records the complete journal entry relating to compensation expense. How does this journal entry affect Total Stockholders' Equity and Common Stock, respectively?

Select one:

a.No Effect, Increase

b.No Effect, No Effect

c.Decrease, Increase

d.Decrease, Decrease

e.Decrease, No Effect