Use the information below for the next two problems. Cottontail wants to find out the maximum amount of cash dividends it can pay this year. The company has 250,000 shares outstanding currently. Its balance sheet is shown below: Assets Cash $ 412,500 Accounts Receivable 900,000 Fixed Assets 987,500 $2,300,000 Liabilities and Shareholders' Equity Accounts Payable $ 445,000 Long-term Payable 280,000 Common Stock 600,000 Retained earnings 975,000 $2,300,000

10. What is the highest amount of dividends that Cottontail firm could pay from a legal perspective?

11. What is the maximum amount of dividends per share that Cottontail could pay in terms of cash availability?

The following information is for questions 12 and 13.

The Liang Company's balance sheet has the following capital section. Liang's stock is currently selling for $5 per share. Common Stock (50,000 shares at $1 par) $50,000 Capital in Excess of Par 50,000 Retained Earnings 100,000 $200,000

12. Liang plans to declare a 2 for 1 stock split. Show the relevant section of the Balance sheet after this.

13. If Liang declared a 10% stock dividend instead of doing the stock split, what would the relevant section of the balance sheet look like?

14. Macagba Company uses 1,100 units of an particular item each year. Carrying the item in inventory costs $200 per unit per year. It costs $150 for each order of the chemical. Macagba uses the item at a constant rate each year. Calculate the Economic Order Quantity.

15. Use the data from problem 14 and assume that Macagba Company operates 250 days per year. Also assume that its total usage is 1,100 units per year. There is a lead time of 2 days and Macagba desires to keep a safety stock of 4 units. Calculate the reorder point.