FreeBird Company, a merchandiser, recently completed its 2013 calendar year. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheet and income statement follow:
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FREEBIRD COMPANY
Comparative Balance Sheet
December 31, 2013 and 2012
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2013
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2012
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Assets
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Cash
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$ 49,200
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$ 73,500
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Accounts receivable
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65,830
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51,000
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Merchandise inventory
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276,000
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252,500
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Prepaid expenses
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1,000
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1,600
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Equipment
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159,000
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106,500
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Accum. depreciation-Equipment
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(31,000)
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(40,000)
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Total assets
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$520,030
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$445,100
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Liabilities and Equity
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Accounts payable
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$ 58,555
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$ 112,000
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Short-term notes payable
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9,000
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7,000
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Long-term notes payable
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65,000
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48,500
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Common stock, $5 par value
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162,750
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150,750
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Paid-in capital in excess of par, common stock
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36,000
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0
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Retained earnings
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188,725
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126,850
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Total liabilities and equity
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$520,030
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$445,100
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FREEBIRD COMPANY
Income Statemen
For Year Ended December 31, 2013
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Sales
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$584,000
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Cost of goods sold
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283,000
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Gross profit
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301,000
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Operating expenses
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Depreciation expense
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$ 20,000
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Other expenses
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132,400
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152,400
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Other gains (losses)
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Loss on sale of equipment
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5,875
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Income before taxes
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$142,725
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Income taxes expense
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24,250
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Net income
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$118,475
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Additional information on year 2013 transactions:
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a.
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The loss on the cash sale of equipment was $5,875 (details in b).
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b.
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Sold equipment costing $46,500, for a loss of $5,875.
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c.
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Purchased equipment costing $99,000 by paying $35,000 cash and signing a long-term note payable for the balance.
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d.
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Borrowed $2,000 cash by signing a nonsales-related short-term note payable.
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e.
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Paid $47,500 cash to reduce the long-term notes payable.
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f.
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Issued 2,400 shares of common stock for $20 cash per share.
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g.
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Net income and dividends were the only items that affected retained earnings.
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1. What is the amount of dividends declared and distributed in 2013?
2. Determine the cash received by Spirit for the equipment sold in item B above.