In Problem 17, suppose Rainbow Umbrella Corp. paid out $34,000 in cash dividends. Is this possible? If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what was the change in the firm’s long-term debt account?

Data from 17

During 2019, Rainbow Umbrella Corp. had sales of $630,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $465,000, $85,000, and $135,000, respectively. In addition, the company had an interest expense of $70,000 and a tax rate of 21 percent. (Assume that interest is fully deductible.)