A comparative balance sheet and income statement is shown for Cruz, Inc. 1. Assu

Question

A comparative balance sheet and income statement is shown for Cruz, Inc.

   

1. Assume that all common stock is issued for cash. What amount of cash dividends is paid during 2017?
2. Assume that no additional notes payable are issued in 2017. What cash amount is paid to reduce the notes payable balance in 2017?
  

CRUZ, INC.
Comparative Balance Sheets
December 31, 2017 2017 2016 Assets Cash $ 75,900 $ 18,900 Accounts receivable, net 32,600 40,100 Inventory 68,300 75,300 Prepaid expenses 4,200 3,500 Total current assets 181,000 137,800 Furniture 84,600 99,200 Accum. depreciation—Furniture (13,100 ) (7,500 ) Total assets $ 252,500 $ 229,500 Liabilities and Equity Accounts payable $ 11,900 $ 16,900 Wages payable 7,100 4,000 Income taxes payable 1,200 2,200 Total current liabilities 20,200 23,100 Notes payable (long-term) 24,800 58,400 Total liabilities 45,000 81,500 Equity Common stock, $5 par value 177,300 141,500 Retained earnings 30,200 6,500 Total liabilities and equity $ 252,500 $ 229,500

Explanation / Answer

1)Cash dividend paid = Beginning retained earning +net income -ending cash balance

       = 6500+24300-30200

        = $ 600

2)cash amount is paid to reduce the notes payable balance in 2017 =Ending balance -beginning balance of note payable

= 24800-58400

= -33600

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