Below is the balance sheet for Glucose Control Company as of Dec. 31, 2019. The company reported an annual net income of $86,000 for the following year, 2020, but did not change its assets or liabilities, unless otherwise noted. Assets Liabilities and Equity Cash 9,000 Accounts payable 20,000 Marketable securities 2,000 Notes payable 6,000 Accounts receivable 7,000 Current liabilities 26,000 Inventory 38,000 Long-term debt 95,000 Current assets 56,000 Total liabilities 121,000 Machines 34,000 Paid-in capital 20,000 Real estate 80,000 Retained earnings 29,000 Fixed assets 114,000 Equity 49,000 Total assets 170,000 Total liab. & equity 170,000 If the company distributed its entire net income as dividends, what would be the value of total equity on Dec. 31, 2020? If the company distributed half of its net income as dividends and used the rest to invest in new machines, what would be the value of total equity on Dec. 31, 2020? If the company didn't pay any dividends, but used the entire net income to pay back long-term debt, what would be the value of total equity on Dec. 31, 2016? If the company distributed half of its net income as dividends, used the rest to invest in new machines and sold all its marketable securities to pay back some long-term debt, what would be the value of total equity on Dec. 31, 2016?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Below is the balance sheet for Glucose Control Company as of Dec. 31, 2019. The company reported an annual net income of $86,000 for the following year, 2020, but did not change its assets or liabilities, unless otherwise noted.

Assets		Liabilities and Equity
Cash	9,000		Accounts payable	20,000
Marketable securities	2,000		Notes payable	6,000
Accounts receivable	7,000		Current liabilities	26,000
Inventory	38,000		Long-term debt	95,000
Current assets	56,000		Total liabilities	121,000
Machines	34,000		Paid-in capital	20,000
Real estate	80,000		Retained earnings	29,000
Fixed assets	114,000		Equity	49,000
Total assets	170,000		Total liab. & equity	170,000

If the company distributed its entire net income as dividends, what would be the value of total equity on Dec. 31, 2020?

If the company distributed half of its net income as dividends and used the rest to invest in new machines, what would be the value of total equity on Dec. 31, 2020?

If the company didn't pay any dividends, but used the entire net income to pay back long-term debt, what would be the value of total equity on Dec. 31, 2016?

If the company distributed half of its net income as dividends, used the rest to invest in new machines and sold all its marketable securities to pay back some long-term debt, what would be the value of total equity on Dec. 31, 2016?

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