Exercise $1-11$A $($Algo$)$ Differences between interest and dividends LO $1-5$

The following account balances were drawn from the financial records of Kent Company $($ KC $)$ as of January $1,$

Year $5$: Assets, $$16,500$; Liabilities, $$4,500$; Common Stock, $$8,000$; and Retained Earnings, $$4,000.$ KC has

agreed to pay the creditors $$450$ of interest per year. Further, KC agrees that for the Year $5$ fiscal year any

annual earnings remaining after the interest charges will be paid out as dividends to the owners.

Required

a$.$ Assuming KC earns a before interest expense recognition profit of $$1,000$ during Year $5,$ determine the

amount of interest and dividends paid.

b$.$ Assuming KC earns a before interest expense recognition profit of $$575$ during Year $5,$ determine the

amount of interest and dividends paid.

c$.$ Assuming KC earns a before interest expense recognition profit of $$100$ during Year $5,$ determine the

amount of interest and dividends paid.

Complete this question by entering your answers in the tabs below.

Required A

Assuming KC earns a before interest expense recognition profit of $$1,000$ during Year $5,$ determine the amount of $i$

dividends paid.

Amount of interest

Dividends paid