Question1: Carter Company had net income of $250,000 and paid dividends of $50,000 to common stockholders and $20,000 to preferred stockholders in 2008. Carter Company's common stockholders' equity at the beginning and end of 2008 was $870,000 and $1,130,000, respectively. There are 100,000 weighted-average shares of common stock outstanding.
Carter Company's return on common stockholders' equity was
[A] 20%
[B] 18%
[C] 25%
[D] 23%
Question2: Rancho Company sold 100 shares of treasury stock for $40 per share. The cost for shares was $30. The entry to record the sale will include a
[A] Debit to Paid-in Capital in Excess of Par Value for $1,000
[B] Credit to Treasury Stock for $4,000
[C] Credit to Gain on Sale of Treasury Stock for $3,000
[D] Credit to Paid-in Capital from Treasury Stock for $1,000