Assume that a Corporation has $5000 in assets, $2,500 in debts, and has 10 shares of $100/share or stock. Construct a balance sheet this Corporation and determine
a) How much dividends or capital distributions could this Corporation legally pay out under the Net Asset test?
b) How much dividends or capital distributions could this Corporation legally pay out under the Surplus test?
c) Which test protects the creditors best? Explain.