Sunshine Day Care Inc

question 34

Multiple Choice

Sunshine Day Care Inc.'s balance sheet indicates that it has current assets of $40,000, Capital Assets net of depreciation of $150,000, current liabilities of $23,000, long-term liabilities of $54,000, paid-in capital of $60,000 worth of common shares and $53,000 in retained earnings. Assuming the book value is a reliable indication of market value of the assets, how much is the maximum dividend that the shareholders can legally vote for themselves?

• A) $113,000.
• B) $53,000.
• C) $190,000.
• D) $136,000.
• E) $153,000.

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Definitions:

Estimated Future Returns

Projections or forecasts about the potential gains or incomes from investments over a future period.

Sales Discounts

A reduction in the price of goods or services offered to customers, usually to prompt early payment or reward bulk purchases.

Gross Price Method

Gross Price Method involves recording inventory at its gross price, before deducting any trade discounts or rebates.

Allowance for Doubtful Accounts

An accounting concept referring to an estimate of the amount of receivables that may not be collected, which is used to reduce the total accounts receivable reported on the balance sheet.