Merck & Co. declared dividends (dollars in millions) of $5,173 (2012), $5,132 (2013), and $5,156 (2014). Cash payments for dividends reported on the statement of cash flows for the three years were $5,116 (2012), $5,157 (2013), and $5,170 (2014). Dividends payable at the end of 2013 totaled $1,321.
a. Briefly explain why dividends on the statement of shareholders’ equity do not equal dividends on the statement of cash flows.
b. What kind of liability is dividends payable?
c. Calculate dividends payable at the end of 2014.