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Effect of net income on a firm's balance sheet Conrad Air, Inc., reported net income of $1,368,000 for the year ended December 31, 2016. Show how Conrad's balance sheet would change from 2015 to 2016 depending on how Conrad "spent" those earnings as described in the scenarios that appear below.

Conrad Air, Inc. Balance Sheet      as of December 31, 2015      Assets      Cash   $117,000  Marketable securities   32,000  Accounts receivable   49,000  Inventories   132,000  Current assets   $330,000  Equipment   $2,964,000  Buildings   1,597,000  Fixed assets   $4,561,000  Total assets   $4,891,000        Liabilities and Stockholders' Equity      Accounts payable   $66,000  Short-term notes   51,000  Current liabilities   $117,000  Long-term debt   $2,701,000  Total liabilities   $2,818,000  Common stock   $505,000  Retained earnings   1,568,000  Stockholders' equity   $2,073,000  Total liabilities and equity   $4,891,000 

a. Conrad paid no dividends during the year and invested the funds in marketable securities.

b. Conrad paid dividends totaling $504,000 and used the balance of the net income to retire (pay off) long-term debt.

c. Conrad paid dividends totaling $504,000 and invested the balance of the net income in building a new hangar.

d. Conrad paid out all $1,368,000 as dividends to its stockholders.

a. If Conrad paid no dividends during the year and invested the funds in marketable securities, the amount transferred to the balance sheet will be ____. (Round to the nearest dollar.)

The ending marketable securities will be ___. (Round to the nearest dollar.)

The ending retained earnings will be____. (Round to the nearest dollar.)

b.If Conrad paid dividends totaling $504,000 and used the balance of the net income to retire (pay off) long-term debt, the amount transferred to the balance sheet will be ___(Round to the nearest dollar.)

The ending long-term debt will be____. (Round to the nearest dollar.)

The ending retained earnings will be____. (Round to the nearest dollar.)

c. If Conrad paid dividends totaling $504,000 and invested the balance of the net income in building a new hangar, the amount transferred to the balance sheet will be ___.

(Round to the nearest dollar.)

The ending buildings will be_____. (Round to the nearest dollar.)

The ending retained earnings will be_____. (Round to the nearest dollar.)

d. If Conrad paid out all $1,368,000 as dividends to its stockholders, the amount transferred to the balance sheet will be _____. (Round to the nearest dollar.)

The ending retained earnings will be___. (Round to the nearest dollar.)

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