b. contractual interest rate increases, then bond prices will go down. c. market rate of interest decreases, then bond prices will go up. d. contractual interest rate increases, the market rate of interest will decrease. 15. A company would not acquire treasury stock a. in order to reissue shares to officers. b. as an asset investment. c. in order to increase trading of the company’ s stock. d. to have additional shares available to use in acquisitions of other companies. 16. Which of the following is the appropriate general journal entry to record the declaration of cash dividends? a. Retained Earnings Cash b. Dividends Payable Cash c. Paid-in Capital Dividends Payable d. Retained Earnings Dividends Payable 17. Allstate, Inc., has 10,000 shares of 6 %, $ 100 par value, cumulative preferred stock and 100,000 shares of $ 1 par value common stock outstanding at December 31, 2007. If the board of directors declares a $ 50,000 dividend, the a. preferred stockholders will receive 1 / 10th of what the common stockholders will receive. b. preferred stockholders will receive the entire $ 50,000. c. $ 50,000 will be held as restricted retained earnings and paid out at some future date. d. preferred stockholders will receive $ 25,000 and the common stockholders will receive $ 25,000. 18. When a change in accounting principle occurs a. prior years ' financial statements should not be changed to reflect the newly adopted principle. b. the new principle should be used in reporting the results of operations of the current year.