Conrad Air, Inc., reported net income of $1,360,000 for the year ended December 31, 2020. Show how Conrad's balance sheet would change from 2019 LOADING... to 2020 depending on how Conrad "spent" those earnings as described in the scenarios that appear below. a. Conrad paid no dividends during the year and invested the funds in marketable securities. b. Conrad paid dividends totaling $499,000 and used the balance of the net income to retire (pay off) long-term debt. c. Conrad paid dividends totaling $499,000 and invested the balance of the net income in building a new hangar. d. Conrad paid out all $1,360,000 as dividends to its stockholders. Conrad Air, Inc. Balance Sheet as of December 31, 2019 Assets Cash $118,000 Marketable securities 31,000 Accounts receivable 44,000 Inventories 127,000 Current assets $320,000 Equipment $2,963,000 Buildings 1,601,000 Fixed assets $4,564,000 Total assets $4,884,000 Liabilities and Stockholders' Equity Accounts payable $68,000 Short-term notes 54,000 Current liabilities $122,000 Long-term debt $2,682,000 Total liabilities $2,804,000 Common stock $500,000 Retained earnings 1,580,000 Stockholders' equity $2,080,000 Total liabilities and equity $4,884,000
Conrad Air, Inc., reported net income of $1,360,000 for the year ended December 31, 2020. Show how Conrad's balance sheet would change from 2019 LOADING... to 2020 depending on how Conrad "spent" those earnings as described in the scenarios that appear below. a. Conrad paid no dividends during the year and invested the funds in marketable securities. b. Conrad paid dividends totaling $499,000 and used the balance of the net income to retire (pay off) long-term debt. c. Conrad paid dividends totaling $499,000 and invested the balance of the net income in building a new hangar. d. Conrad paid out all $1,360,000 as dividends to its stockholders. Conrad Air, Inc. Balance Sheet as of December 31, 2019 Assets Cash $118,000 Marketable securities 31,000 Accounts receivable 44,000 Inventories 127,000 Current assets $320,000 Equipment $2,963,000 Buildings 1,601,000 Fixed assets $4,564,000 Total assets $4,884,000 Liabilities and Stockholders' Equity Accounts payable $68,000 Short-term notes 54,000 Current liabilities $122,000 Long-term debt $2,682,000 Total liabilities $2,804,000 Common stock $500,000 Retained earnings 1,580,000 Stockholders' equity $2,080,000 Total liabilities and equity $4,884,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Conrad Air, Inc., reported net income of
balance sheet would change from
to
$1,360,000
for the year ended December 31,
2020.
Show how Conrad's 2019
LOADING...
2020
depending on how Conrad "spent" those earnings as described in the scenarios that appear below.a. Conrad paid no dividends during the year and invested the funds in marketable securities.
b. Conrad paid dividends totaling
$499,000
and used the balance of the net income to retire (pay off) long-term debt.c. Conrad paid dividends totaling
$499,000
and invested the balance of the net income in building a new hangar.d. Conrad paid out all
$1,360,000
as dividends to its stockholders.Conrad Air, Inc. Balance Sheet
as of December 31, 2019
Assets
Cash
$118,000
Marketable securities
31,000
44,000
Inventories
127,000
Current assets
$320,000
Equipment
$2,963,000
Buildings
1,601,000
Fixed assets
$4,564,000
Total assets
$4,884,000
Liabilities and Stockholders' Equity
Accounts payable
$68,000
Short-term notes
54,000
Current liabilities
$122,000
Long-term debt
$2,682,000
Total liabilities
$2,804,000
Common stock
$500,000
1,580,000
Stockholders' equity
$2,080,000
Total liabilities and equity
$4,884,000
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a. Conrad paid no dividends during the year and invested the funds in marketable securities:
VIEWb. Conrad paid dividend totaling $ 4,99,000 and the balance used to pay long term debt
VIEWConrad paid dividend totaling $4,99,000 and invested balance in building a new hanger
VIEWd. Conrad paid out all $13,60,000 as dividend
VIEW
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