What is the amount of dividends declared and distributed in

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Reference no: EM13566792

FreeBird Company, a merchandiser, recently completed its 2013 calendar year. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheet and income statement follow:

FREEBIRD COMPANY Comparative Balance Sheet December 31, 2013 and 2012
	2013	2012
Assets
Cash	$ 49,200	$ 73,500
Accounts receivable	65,830	51,000
Merchandise inventory	276,000	252,500
Prepaid expenses	1,000	1,600
Equipment	159,000	106,500
Accum. depreciation-Equipment	(31,000)	(40,000)
Total assets	$520,030	$445,100
Liabilities and Equity
Accounts payable	$ 58,555	$ 112,000
Short-term notes payable	9,000	7,000
Long-term notes payable	65,000	48,500
Common stock, $5 par value	162,750	150,750
Paid-in capital in excess of par, common stock	36,000	0
Retained earnings	188,725	126,850
Total liabilities and equity	$520,030	$445,100

FREEBIRD COMPANY Income Statemen For Year Ended December 31, 2013
Sales		$584,000
Cost of goods sold		283,000
Gross profit		301,000
Operating expenses
Depreciation expense	$ 20,000
Other expenses	132,400	152,400
Other gains (losses)
Loss on sale of equipment		5,875
Income before taxes		$142,725
Income taxes expense		24,250
Net income		$118,475

Additional information on year 2013 transactions:

a.	The loss on the cash sale of equipment was $5,875 (details in b).
b.	Sold equipment costing $46,500, for a loss of $5,875.
c.	Purchased equipment costing $99,000 by paying $35,000 cash and signing a long-term note payable for the balance.
d.	Borrowed $2,000 cash by signing a nonsales-related short-term note payable.
e.	Paid $47,500 cash to reduce the long-term notes payable.
f.	Issued 2,400 shares of common stock for $20 cash per share.
g.	Net income and dividends were the only items that affected retained earnings.

1. What is the amount of dividends declared and distributed in 2013?

2. Determine the cash received by Spirit for the equipment sold in item B above.

Reference no: EM13566792

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