1. (a) How does the payment of dividends of $15,000 affect the three elements of the accounting equation?
(b) Is net income affected by the payment of dividends? Explain.
2. Assume that Margarita Consulting erroneously recorded the payment of $7,500 of dividends as salary expense. (a) How would this error affect the equality of the accounting equation? (b) How would this error affect the income statement, retained earnings statement, balance sheet, and statement of cash flows?