Liquidation

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Question


Help Im totally lost on this subject:
The financial condition of GreyCo Inc. is expressed in the following accounting equation:
Assets = Liabilities + Common Stock + Retained Earnings
$800 Cash +$9200 Land = $7200 + $2,000 + $1,000
A. Are divideneds paid to creditors or investors? Explain why?
B. How much cash is in the Retained Earnings Account?
C. Determine the maximum dividend GreyCo can pay.
D. If the obligation to creditors is due, can GreyCo repay the loan? Why or Why not?
E. Suppose the land sinks into the sea as a result of an earthquake and a resulting tsunami. The buisness is then liquidated. How much cash will creditors recieve? How much cash will investors recieve? ( Assume there are no legal fees or other costs of liquidation.)