I need to answer the question using the attached balance sheet. Answers with Profit of year, or opening balance do me no good. I understand the land price of 400K goes on Asset side, Bank loan of 360K on Liability side. Where does the Pain in Dividends go? If you can answer using my set up or help me on where the numbers go, THat will be great.
The company made a secondary offering of stock and raised an additional $180,000 which includes $150,000 of Paid-in Capital.
The company had already paid $15,000 in dividends before deciding on the offering.
The company now has cash to invest in a piece of raw land on which to build in the future. The investment takes place before year end. The cost of the land is $400,000, the down payment is $40,000 and a note to the bank covers the rest.
Attachment:- Balance SHeet.doc