Thai Company was formed on January 1, 20X1. The company's accountant prepared the following income statement, statement of retained earnings, and balance sheet at the conclusion of the first full year of operations. Mr. Thai desires for the company to declare and pay a dividend equivalent to the company's net income for the year. THAI COMPANY Income Statement For the Year Ending December 31, 20x1 Revenues Services to customers 105,000 Expenses Wages 45,000 Rent 18,000 3.000 Net income 42.000 Thai company Statement of Retained Earnings For the Year inding December 31, 20x1 Beginning retained eamings Plus Net income 42.000 42,000 Less Dividends Ending retained earmings 42.000 THAI company Balance Sheet December 31, 20XI Assets Cash 6.000 Accounts receivible 22.500 Equipment 75.000 Total assets 103.500 Liabilities Rent payable 1,500 Notes payable 45.000 Total ablities 46.500 Stockhelders' equity Capital stock 15.000 Retained earnings 42.000 Total stockholders' equty 57,000 Total liablities and equity 103.500 a) Is the company currently able to declare and pay the dividend? Why or why not? b) Explain why net income can differ from cash provided by operations. c) In addition to operating activities, what other "categories" of business activity can generate
Thai Company was formed on January 1, 20X1. The company's accountant prepared the following income statement, statement of retained earnings, and balance sheet at the conclusion of the first full year of operations. Mr. Thai desires for the company to declare and pay a dividend equivalent to the company's net income for the year. THAI COMPANY Income Statement For the Year Ending December 31, 20x1 Revenues Services to customers 105,000 Expenses Wages 45,000 Rent 18,000 3.000 Net income 42.000 Thai company Statement of Retained Earnings For the Year inding December 31, 20x1 Beginning retained eamings Plus Net income 42.000 42,000 Less Dividends Ending retained earmings 42.000 THAI company Balance Sheet December 31, 20XI Assets Cash 6.000 Accounts receivible 22.500 Equipment 75.000 Total assets 103.500 Liabilities Rent payable 1,500 Notes payable 45.000 Total ablities 46.500 Stockhelders' equity Capital stock 15.000 Retained earnings 42.000 Total stockholders' equty 57,000 Total liablities and equity 103.500 a) Is the company currently able to declare and pay the dividend? Why or why not? b) Explain why net income can differ from cash provided by operations. c) In addition to operating activities, what other "categories" of business activity can generate
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter4: Completing The Accounting Cycle
Section: Chapter Questions
Problem 7E: FedEx Corporation had the following revenue and expense account balances (in millions) for a recent...
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