available for two 194 CHAPTER 4.10. The following income statement and balance sheet information are firms, Firm A and Firm B. (a) Calculate the amount of dividends Firm A and Firm B paid using the information given (b) Prepare a statement of cash flows for each firm using the indirect method. (c) Analyze the difference in the two firms. Income Statement for Year Ended December 31, 2015 Firm A Firm B $1,000,000 $1,000,000 Sales Cost of goods sold 700,000 700,000 Gross profit 300,000 300,000 Other expenses Selling and administrative 120,000 115,000 Depreciation 10,000 30,000 Interest expense 20,000 5,000 Earnings before taxes 150,000 150,000 Income tax expense 75,000 75,000 Net Income $ 75,000 75,000 Changes in Balance Sheet Accounts December 31, 2014, to December 31, 2015 Firm A Firm B Cash and cash equivalents Accounts receivable Inventory Property, plant, and equipment Less accumulated depreciation Total Assets Accounts payable Notes payable (current) Long-term debt Deferred taxes (noncurrent) Capital, stock Retained earnings Total Liabilities and Equity $ 0 +40,000 +40,000 +20,000 (+10,000) S +90,000 5-20,000 +17,000 +20,000 +3,000 $+10,000 +5,000 -10,000 +70,000 (+30,000) $ 145,000 $ -5,000 +2,000 -10,000 +18,000 - +70,000 $ +90,000 +40,000 $ +45,000