Q1) Which of the following statements about treasury stock is correct?

a) When a company reissues treasury stock for more than it originally paid for the stock, it does not report a gain.

b) When a company purchases treasury stock, it increases total stockholders' equity.

c) Treasury stock is reported as an asset on the balance sheet.

d) Treasury stock is reported as issued and outstanding stock.

Q2) A company has outstanding 9 million shares of $2 par value common stock and 1 million shares of $4 par value preferred stock. The preferred stock has an 8% dividend rate. The company declares $600,000 in total dividends for the year. Which of the following is correct if dividends in arrears are $30,000?

a) Preferred stockholders will receive $350,000; common stockholders will receive $250,000.

b) Preferred stockholders will receive $60,000; common stockholders will receive $540,000.

c) Preferred stockholders will receive $320,000; common stockholders will receive $280,000.

d) Preferred stockholders will receive $90,000; common stockholders will receive $510,000.