Consider the following financial statements (in millions of $). In 2016, the company did not pay any dividends. If this is the case, what was the retained earnings at the end of year 2015?A) $ 1000 B) $ 974C) $ 842D) $ 868E) OTHER Income Statement (2017)Balance Sheet (2017)Credit Sales1.500Cash?Accounts Payable?Cost of Goods Sold?Accounts Receivable?Short-Term Debt125Taxable Income?Long-Term Debt845InventoryFixed Assets?Taxes (34%)?2.092 Common Stock845Net Income?Retained Earnings 1.132Total?Total?Dividend (33.33%)Retained Earnings??Main assumptions:Sales has increased by 25% in 2017."Cost of goods sold" is 80% of sales in the income statement at all times. All other items areindependent of sales.Each current asset and accounts payable are fractions of sales in the balance sheet. All other itemsare independent of sales.Current ratio is 3, accounts receivable turnover is 2, inventory turnover is 4, accounts payableturnover is 5 at all times. Turnovers are calculated with respect to the current period balanceswithout averaging with past year balances.Throughout the year 2017:o the company raised funds through short-term debt first.o the company raised the remaining funds through 50% long-term debt and 50% equityoffering (common stock).

Retained Earning - It is a portion of company's income / profit left over the business after making…

Consider the following financial statements (in millions of $). In 2016, the company did not pay any dividends. If this is the case, what was the retained earnings at the end of year 2015? A) $ 1000 B) $ 974 C) $ 842 D) $ 868 E) OTHER

Consider the following financial statements (in millions of $). In 2016, the company did not pay any dividends. If this is the case, what was the retained earnings at the end of year 2015? A) $ 1000 B) $ 974 C) $ 842 D) $ 868 E) OTHER

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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