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Question
Salashar, Inc.'s balance sheet is as follows:| Cash | $1,000,000 | Current Liabilities | $1,300,000 |
| Other Current Assets | $2,000,000 | Long-term Debt | $4,100,000 |
| Long-term Assets | $8,000,000 | Common Stock | $5,000,000 |
| Retained Earnings | $600,000 | ||
| Total Assets | $11,000,000 | Total Liab. And Equity | $11,000,000 |
Salashar decides to pay a dividend. Which of the following statements is MOST correct?
A) The dividend cannot exceed $1,000,000, the amount of cash available.
B) The dividend cannot exceed $1,700,000, the amount of net working capital.
C) The dividend cannot exceed $600,000, the amount of retained earnings.
D) The dividend cannot exceed $11,000,000, the amount of total assets.
Answer
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