Blighs, Inc

Blighs, Inc. would like to pay a dividend to its shareholders. It has only been in business a few years and does not yet have any retained earnings. However, it has a new product which is breaking all sales records. This quarter, Blighs anticipates about $3 million in earned surplus. It should be able to pay all of its bills as they become due. Under
which of the following tests would Blighs be able to pay a dividend? Explain.
a. Earned surplus test
b. Surplus test
_{c. Net assets test}

Correct Answer:

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_a. Preemptive rights are shareholders' righ...

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