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

Question

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 $130 Accounts receivable 545    Notes payable 225 Inventories 890    Accruals 250   Total current assets $1,455      Total current liabilities $605 Net plant and equipment 2,330    Long-term bonds 1,520      Total debt $2,125    Common stock (100 million shares) 260    Retained earnings 1,400      Common equity $1,660 Total assets $3,785    Total liabilities and equity $3,785

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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