Reference no: EM132530099

Roberto Designers was organized on January 1, 2021. The firm was authorized to issue 150,000 shares of $5 par value common stock. During 2021, Roberto had the following transactions relating to stockholders' equity:

Issued 15,000 shares of common stock at $7 per share.

Issued 30,000 shares of common stock at $8 per share.

Reported a net income of $150,000.

Paid dividends of $75,000.

Purchased 3,000 shares of treasury stock at $10 (part of the 30,000 shares issued at $8).

Question 1: What is total stockholders' equity at the end of 2021?

Multiple Choice

Option 1: $390,000.

Option 2: $420,000.

Option 3: $885,000.

Option 4: $735,000.

Question 2: A company issued 1,200 shares of $5 par value preferred stock for $6 per share. What is true about the journal entry to record the issuance?

Multiple Choice

Option 1: Debit Preferred Stock $7,200

Option 2: Credit Additional Paid-In Capital $1,200

Option 3: Credit Preferred Stock $7,200

Option 4: Credit Cash $7,200