Calculate the amount of dividends firm a and firm b paid

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Reference no: EM13899506

The following income statement and balance sheet information are available for two firms, Firm A and Firm B.

(a) Calculate the amount of dividends Firm A and Firm B paid using the information given.

(b) Prepare a statement of cash flows for each firm using the indirect method.

Income Statement for Year Ended December 31, 2012

	Firm A	Firm B
Sales	$1,000,000	$1,000,000
Cost of goods sold	700,000	700,000
Gross profit Other expenses	300,000	300,000
Selling and administrative	120,000	115,000
Depreciation	10,000	30,000
Interest expense	20,000	5,000
Earnings before taxes	150,000	150,000
Income tax expense	75,000	75,000
Net Income	$ 75,000	$ 75,000

Changes in Balance Sheet Accounts December 31, 2011, to December 31, 2012

Firm A

Firm B

Cash and cash equivalents Accounts receivable Inventory

Property, plant, and equipment Less accumulated depreciation

Total Assets Accounts payable

Notes payable (current) Long-term debt

Deferred taxes (noncurrent) Capital, stock

$ 0

+40,000

+20,000

(+10,000)

$ +90,000

$ -20,000

+17,000

+20,000

+3,000

$ +10,000

+5,000

-10,000

+70,000

(+30,000)

$ +45,000

$ -5,000

+2,000

-10,000

+18,000

Retained earnings

Total Liabilities and Equity

+70,000

$ +90,000

+40,000

$ +45,000

Reference no: EM13899506

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