Problem 3-09. Financial statements The Davidson Corporation\'s balance sheet and

Question

Problem 3-09. Financial statements

The Davidson Corporation's balance sheet and income statement are given below:

Davidson Corporation: Balance Sheet as of December 31, 2008 (Millions of Dollars)
ASSETS LIABILITIES AND EQUITY
Cash and equivalents $15 Accounts payable $100
Accounts receivable 570 Notes payable 210
Inventories 900 Accruals 240
Total current assets $1,485 Total current liabilities $550
Net plant and equipment 2,445 Long-term bonds 1,500
Total debt $2,050
Common stock (100 million shares) 280
Retained earnings 1,600
Common equity $1,880
Total assets $3,930 Total liabilities and equity $3,930

Davidson Corporation: Income Statement for Year Ending December 31, 2008 (Millions of Dollars)
Sales $5,250
Operating costs excluding depreciation and amortization 3,360
EBITDA $1,890
Depreciation and amortization 262.5
EBIT $1,627.5
Less: Interest 164
EBT $1,463.5
Taxes (40%) 585.4
Net income $878.1
Common dividends paid $636.6225
Earnings per share $8.781

a. Construct the Statement of Retained Earnings for December 31, 2008. Round your answer to two decimal places.
Balance of Retained Earnings, December 31, 2007 million

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