Given that:

CNE Inc. sells computer network equipment. The early part of the year turned out to be highly profitable for CNE with

record breaking sales from January through March. Exhibit A on page $3$ shows the breakout of the number of units sold to

CNE$$s primary customers including when each customer purchased product, when the order was shipped, the number of

units purchased and the price per unit. To help expedite sales CNE offered $1/15,$ n$/30$ credit terms to all of its customers.

Integrative Design took advantage of these credit terms with Integrative Design paying within $10$ days after the ship date of

its product. Acore paid for its purchase $35$ days after the ship date of its product. While Xplex paid $50\%$ of the order

amount at the time it order its product and planned on paying the remaining $50\%$ of its order $45$ days after the ship date of

its product. Unfortunately, on April $10$th Xplex declared bankruptcy and did not pay the remaining accounts receivable

balance.

To generate more operating cash flow, the company decided to rely more heavily on accounts payable. In January, all

purchases for raw materials were switched from a cash basis to accounts payable with $2/15$ n$/30$ terms. Exhibit B on page

$3$ shows the schedule of the company $$s raw material purchases by month and when CNE paid for each purchase.

To remain competitive CNE expanded its output by automating its production process. On January $1$ st$,$ CNE operationalized

$$1,000,000$ for new robotic equipment and spent another $$300,000$ to have the equipment installed. The robotic

equipment has a useful life up to $7$ years. The salvage value of this equipment is estimated at $$100,000.$ As a result of

automating its production process, CNE was able to reduce its direct labor cost down to $$85$ dollars per unit.

CNE financed this new equipment purchase through a combination of debt and equity. On January $1$st$,$ CNE received a

$$800,000$ loan from a commercial bank at $5\%$ interest. Starting on February $1$ st principal and interest payments of $11,700$

are to be paid on a monthly basis over $7$ years. Also, in January CNE issued $$750,000$ of common stock. In this offering,

$100,000$ shares were issued at a par value of $$3$ per share.

CNE: Impacts on the Balance Sheet and Income Statement

As the first quarter came to a close profits were at a record high. CNE declared a cash and stock dividend in the month of

March. The cash dividend was set at $$\mathrm{.}75$ cents per share and the stock dividend was set at $7\%$ of total outstanding stock

with a par value of $$1\mathrm{.}50$ per share. Total outstanding stock at the end of March was $150,000$ shares. The dividends were

distributed in April. The stock was trading at $$8\mathrm{.}50$ per share at the time the dividends were declared and distributed.

Additional Assumptions:

$1.$ Assume the deprecation for the capital equipment starts January $1$ st$.$

$2.$ All units are manufactured in the same month of the raw material purchase.

$3.$ Direct Labor is paid for in cash at the end of each month.

CNE: Impacts on the Balance Sheet and Income Statement

Please answer:

$1.$ Assuming CNE Inc. could receive $2/15,$ n$/30$ terms from its suppliers for its accounts payable $($A$/$P$),$ how much cash would CNE Inc. pay to its suppliers from January through April?

$($A$/$P$),$ how much cash would CNE Inc. pay to its suppliers from January through April?

$2.$ Again, assuming $2/15,$ n$/30$ terms from its suppliers, and CNE Inc. adopting a policy of paying its suppliers early based on these terms, what would CNE Inc.$\text{'}$s accounts payable $($A$/$P$)$ ending balance be at the end of March if the beginning A$/$P balance was zero at the beginning of January?

$3.$ Based on the assumptions given in questions $1$ and $2$ regarding A$/$P terms and policies, what is the dollar amount adjustment $($if none input $0),$ CNE Inc. needs to make to inventory in the month of April?

$4.$ In the month of April, what will be CNE Inc. interest payment on its $$800,000$ loan?

$5.$ In the month of April what will be the remaining balance on CNE Inc.$\text{'}$s loan?

$6.$ Given CNE Inc.$\text{'}$s stock and cash dividend declaration, what is the dollar amount impact to its balance sheet account "Cash Dividend Payable" $($if none enter $0),$ in the month of March?

$7.$ Given CNE Inc.$\text{'}$s stock and cash dividend declaration, what is the dollar amount impact to its balance sheet account "Additions to Paid in Capital", $($if none enter $0),$ in the month of March?

$8.$ Given CNE Inc.$\text{'}$s stock and cash dividend declaration, what is the dollar amount impact to its balance sheet account "Additions to Paid in Caapital", $($if none enter $0),$ in the month of March?

$9.$Exhibit B$-$Raw Material Purchase Schedule Given CNE Inc.$\text{'}$s stock and cash dividend declaration, what is the dollar amount impact to CNE Inc.$\text{'}$s overall shareholder equity?