The following data for Schwartz Company represent a summary of your first-iteration forecast

amounts for Year +1. Schwartz uses dividends as a flexible financial account. Compute the amount
of dividends you can assume that Schwartz will pay in order to balance your projected balance
sheet. Present the projected balance sheet.
Year +1
Operating Income ……………………………….. $ 58
Interest Expense …………………………………… (8)
Income before Tax ………………………………. $ 50
Tax Provision (20.0 percent effective tax rate) …… (10)
Net Income ……………………………………….. $ 40
Total Assets ……………………………………… $200
Accrued Liabilities ………………………………… $ 43
Long-Term Debt ………………………………….. $ 80
Common Stock, at par ……………………………. $ 20
Retained Earnings (at the beginning of Year +1) … $ 34
Balance Sheet
Assets Amount Liabilities Amount
Total Assets $ 200 Common Stock $ 20
Retained Earnings $ 57
Long Term Debt $ 80
Accrued Liabilities $ 43

$ 200 $ 200
Calculation of Dividends
Common Stock $ 20
Retained Earnings $ 34
Long Term Debt $ 80
Accrued Liabilities $ 43
Net Income $ 40
Total $ 217
less: Total Assets $ 200
Dividends that can be paid $ 17

Statement of Retained Earnings

Beginning Balance $ 34
add: Net Income $ 40
less: Dividends $ 17
Ending Balance $ 57