Financial Statements The Davidson Corporation\'s balance sheet and income statem

Question

Financial Statements

The Davidson Corporation's balance sheet and income statement are provided here.

Davidson Corporation: Balance Sheet as of December 31, 2012 (Millions of Dollars)

Davidson Corporation: Income Statement for Year Ending December 31, 2012 (Millions of Dollars)

Construct the statement of stockholders' equity for December 31, 2012. No common stock was issued during 2012. Write out all your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest share or dollar.

Enter your answers for parts b-d in millions. For example, an answer of $25,000,000 should be entered as 25.

Assets
Liabilities and Equity
Cash and equivalents $20 Accounts payable $100 Accounts receivable 600 Notes payable 210 Inventories 890 Accruals 240 Total current assets $1,510 Total current liabilities $550 Net plant and equipment 2,290 Long-term bonds 1,510 Total debt $2,060 Common stock (100 million shares) 240 Retained earnings 1,500 Common equity $1,740 Total assets $3,800 Total liabilities and equity $3,800

Explanation / Answer

Balance of Retained Earnings, December 31, 2007 =
Balance of Retained Earnings, December 31, 2008 + Dividends paid to common stockholders million - Net income, 2008

Balance of Retained Earnings, December 31, 2007 =$1600 + $148 - $372 = $1376 Million
So Balance of Retained Earnings, December 31, 2007 = $1376 million
Add: Net income, 2008 million = $372 Millon
Less: Dividends paid to common stockholders million = $148 million
Balance of Retained Earnings, December 31, 2008 million = $1600 million

b.

Retained earnings are earnings of a corporation that are reinvested in the business rather than being distributed to shareholders as dividends.SO In Year 2007, amount reinvested is $1376 million & in Year 2008, it is $1600 Million.

c.

It is equal to Cash in Hand ie 15million

d.current creditors to be paid within the next year $620 million

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