Question

Use the following information to answer this question.

Windswept, Inc. 2017 Income Statement ($ in millions)
Net sales	$	11,000
Cost of goods sold		8,200
Depreciation		395
Earnings before interest and taxes	$	2,405
Interest paid		110
Taxable income	$	2,295
Taxes		689
Net income	$	1,606

  

Windswept, Inc. 2016 and 2017 Balance Sheets ($ in millions)
		2016			2017				2016			2017
Cash	$	420		$	445		Accounts payable	$	2,060		$	2,005
Accounts rec.		1,210			1,110		Long-term debt		1,120			1,580
Inventory		1,980			1,820		Common stock		3,460			3,190
Total	$	3,610		$	3,375		Retained earnings		700			950
Net fixed assets		3,730			4,350
Total assets	$	7,340		$	7,725		Total liab. & equity	$	7,340		$	7,725
What were the total dividends paid for 2017?   $1,161 million $250 million $505 million $825 million $1,356 million

Answer 1

Solution:
	Answer is 5th option $1,356 million
Working Notes:
	Dividend paid 2017 = Net income for 2017 - Increase in Retained earnings
	Dividend paid 2017 = $1,606 - (Retained earnings 2017 - Retained earnings 2016)
	Dividend paid 2017 = $1,606 - (950 - 700)
	Dividend paid 2017 = $1,606 - $250
	Dividend paid 2017 = $1,356 million
Please feel free to ask if anything about above solution in comment section of the question.

answered by: anonymous