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.Lott Co. has outstanding 20,000 shares of 8% preferred stock with a $10 par value and 100,000 shares of $4 par value common stock. Dividends have been paid every year except last year and the current year. If the preferred stock is cumulative and fully participating and $100,000 is distributed, the common stockholders will receive:

Select one:

a. $18,667

b. $45,333

c. $56,000

d. $58,000

e. $44,000