Business, 26.11.2021 20:40 shamiahG

Ompany A and Company B are identical in all regards except that during Year 1 Company A borrowed $28,000 at an interest rate of 10%. In contrast, Company B obtained financing by acquiring $28,000 from sale of common stock Company B agreed to pay a $2,800 cash dividend each year. Both companies are in a 30% tax bracket. Which company would show the greater retained earnings at the end of Year 1, and by what amount? A. Company A's retained earnings would be higher by $2,800
B. Company B's retained earnings would be higher by $1960,
C. Company A's retained earnings would be higher by $840.
D. Both would show the same retained earnings.

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Ompany A and Company B are identical in all regards except that during Year 1 Company A borrowed $28...

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