DeBauge Realtors, Inc., is a realty firm owned by Jeff and Kristi DeBauge. The DeBauge family owns 100% of the corporation's stock. The following

summarized data (in thousands) are taken from the December 31, 2016, financial statements:

For the Year Ended December 31, 2016:

Commissions revenue $ 426

Cost of services provided 177

Advertising expense 84

Operating income $ 165

Interest expense 15

Income tax expense 48

Net income $ 102

At December 31, 2016:

Assets

Cash and short term

investments $ 90

Accounts receivable, net 120

Property, plant, and equipment, net 375

Total assets $ 585

Liabilities and Stockholders' Equity

Accounts payable $ 270

Income taxes payable 15

Notes payable (long term) 150

Paidin

capital 60

Retained earnings 90

Total liabilities and stockholders' equity $ 585

At December 31, 2015, total assets were $615 and total stockholders' equity was $150. There were no changes in notes payable or paidin

capital

during 2016.

Required:

a. What particular expense do you suppose accounts for the largest portion of the $177 cost of services provided?

b. The cost of services provided amount includes all operating expenses (i.e., selling, general, and administrative expenses) except advertising

expense. What do you suppose the primary reason was for DeBauge Realtors, Inc., to separate advertising from other operating expenses?

C. Calculate the effective interest rate on the notes payable for DeBauge Realtors, Inc

e1. Calculate the amount of dividends declared and paid to Jeff and Kristi DeBauge during the year ended December 31, 2016.

e2. What is the company's dividend policy? (What proportion of the compa ny's earnings are distributed as dividends?)