Effect of net income on a firm’s balance sheet Relaxing Resort Group reported net income of $1,736,000 for the year ended December 31, 2015. Show how Relaxing Resort Group’s balance sheet would change from 2014 to 2015 depending on how Relaxing Resort Group “spent” those earnings as described in the situations that appear below.

a. Relaxing Resort Group paid no dividends during the year and invested the funds in marketable securities.
b. Relaxing Resort Group paid dividends totaling $800,000 and used the balance of the net income to retire (pay off) long-term debt.
c. Relaxing Resort Group paid dividends totaling $800,000 and invested the balance of the net income in building a new coffee lounge.
d. Relaxing Resort Group paid out all $1,736,000 as dividends to its stockholders.

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Assets Cash Relaxing Resort Group Balance Sheet as of December 31, 2014 Liabilities and Stockholders' Equity Accounts payable Short-term notes Marketable securities Accounts receivable Inventories Current assets Equipment Buildings Fixed assets Total assets $ 120,000 56,000 66,000 $ 130,000 $ 372,000 $3,928,000 $1,600,000 $5,528,000 $5,900,000 Current liabilities Long-term debt Total liabilities Common stock Retained earnings Stockholders' equity Total liabilities and equity $ 170,000 76,000 $ 246,000 $3,210,500 $3,456,500 $ 500,000 $1,964,500 $2,464,500 $5,921,000