23. T, F. A corporations legal capital is the amount of the owners equity that cannot be distributed to shareholders.

24. T, F. A stock subscription contract is not a legally binding contract until the shares are fully subscribed.

25. BB Johnson issued 1000 shares of its $5 par value common stock for $15 per share. The journal entries that should be made are:

a. Debit Cash $15,000, Cr. Common Stock $5 and Dr. Additional Paid In Capital $10,000.

b. Dr. Cash $15,000 Cr. Common Stock $5 par value $5,0000 and Cr. Paid in capital $10,000

c. Dr. Retained Earning $15,000; Cr. Common Shares $5,000 and Paid In Capital $10,000

d. All of the above

e. None of the above.

26. ABC declared dividends of $1 per share for its 10,000 share holders and decides to pay 6% preferred Shareholders of 20,000 their dividends. The total amount to be charged to dividends should be: