Question

Required information [The following information applies to the questions displayed below.] A comparative balance sheet and income statement is shown for Cruz, Inc. CRUZ, INC. Comparative Balance Sheets December 31, 2017 2017 2016 Assets Cash $ 85,900 $ 21,600 Accounts receivable, net 36,900 45,800 Inventory 77,200 86,000 Prepaid expenses 4,900 3,900 Total current assets 204,900 157,300 Furniture 98,900 110,500 Accum. depreciation—Furniture (15,300 ) (8,300 ) Total assets $ 288,500 $ 259,500 Liabilities and Equity Accounts payable $ 13,600 $ 19,100 Wages payable 8,100 4,300 Income taxes payable 1,300 2,400 Total current liabilities 23,000 25,800 Notes payable (long-term) 26,800 63,700 Total liabilities 49,800 89,500 Equity Common stock, $5 par value 207,600 165,100 Retained earnings 31,100 4,900 Total liabilities and equity $ 288,500 $ 259,500 CRUZ, INC. Income Statement For Year Ended December 31, 2017 Sales $ 444,200 Cost of goods sold 285,900 Gross profit 158,300 Operating expenses Depreciation expense $ 34,200 Other expenses 81,200 115,400 Income before taxes 42,900 Income taxes expense 15,600 Net income $ 27,300 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?

Answer 1

1. Cash Dividend:

The Cash Dividend will be $28,300.

2. Payment of Notes Payable:

The Payment of Notes Payable will be of $36,900.

Step-by-step explanation:

Cruz, Inc.

Statement of Cash Flow

As of December 31, 2017

CASH FLOWS FROM OPERATING ACTIVITIES $

Net Income 27,300

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation on Fixed Assets 34,200

(Increase) Decrease in Current Assets:

Accounts Receivables 8,900

Merchandise Inventory 8,800

Prepaid expenses (1,000)

Increase (Decrease) in Current Liabilities:

Accounts Payable (5,500)

Wages payable 3,800

Income taxes payable (1,100)

NET CASH PROVIDED BY OPERATING ACTIVITIES 75,400

CASH FLOWS FROM INVESTING ACTIVITIES

Sale of Furniture 11,600

NET CASH USED IN INVESTING ACTIVITIES 11,600

CASH FLOWS FROM FINANCING ACTIVITIES

Payment of Note Payable, Long Term (36,900)

Payment of Cash Dividends (28,300)

Issuance of Common Stock 42,500

NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES (22,700)

NET INCREASE (DECREASE) IN CASH 64,300

Cash Balance, December 31 2016 21,600

Cash Balance, December 31 2017 85,900