Conrad Air Inc. reported net income of $1,365,000 for the year ended December 31, 2020. Show how Conrad’s balance sheet would change from 2019 to 2020 depending on how Conrad “spent” those earnings as described in the scenarios that appear below.

a. Conrad paid no dividends during the year and invested the funds in marketable securities.
b. Conrad paid dividends totaling $500,000 and used the balance of the net income to retire (pay off) long-term debt.
c. Conrad paid dividends totaling $500,000 and invested the balance of the net income in building a new hangar.
d. Conrad paid out all $1,365,000 as dividends to its stockholders.

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Conrad Air Inc. Balance Sheet as of December 31, 2019 Liabilities and Stockholders' Equity Assets $ 120,000 Cash Accounts payable 70,000 Marketable securities Short-term notes 35,000 55,000 $ 125,000 Accounts receivable Current liabilities 45,000 $ 130,000 $ 330,000 Inventories Long-term debt 2,700,000 Total liabilities $2,825,000 Current assets $ 500,000 $2,970,000 Equipment Common stock Buildings Retained earnings Stockholders' equity 1,575,000 1,600,000 Fixed assets $4,570,000 $2,075,000 Total liabilities and equity Total assets $4,900,000 $4,900,000