Company a and Company B Are Identical in All Regards

question 78

Multiple Choice

Company A and Company B are identical in all regards except that during 2016 Company A borrowed $40,000 at an interest rate of 10%.In contrast,Company B obtained financing by acquiring $40,000 from sale of common stock.Company B agreed to pay a $4,000 cash dividend each year.Both companies are in a 30% tax bracket.Which company would show the greater retained earnings at the end of 2016,and by what amount?

• A)Company A's retained earnings would be higher by $4,000.
• B)Company B's retained earnings would be higher by $2,800.
• C)Company A's retained earnings would be higher by $1,200.
• D)Both would show the same retained earnings.

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Definitions:

AUG

A codon that both signals the start of translation and codes for the amino acid methionine in genetic sequences.

Single Gene

A gene that by itself can determine a particular trait or phenotype.

Multiple Versions

Different editions or forms of the same content or object, often existing to suit different needs or preferences.

Protein

Large, complex molecules made up of amino acids that play many critical roles in the body, including in the structure, function, and regulation of tissues and organs.