Partial forecasts of financial statements for Watson Corporation appear in Exhibit 10.8 (income statement), Exhibit 10.9 (balance sheet), and Exhibit 10.10 (statement of cash flows). Selected amounts have been omitted, as have all totals (indicated by XXXX).

Required
Determine the amount of each of the following items.
a. Dividends declared and paid during Year 1
b. Depreciation expense for Year 1 assuming that Watson Corporation neither sold nor retired depreciable assets during Year 1
c. Inventories at the end of Year 2
d. Interest expense on borrowing during Year 2, with an interest rate of 7 percent
e. Other current liabilities at the end of Year 2
f. Property, plant, and equipment at the end of Year 3 assuming that Watson Corporation neither sold nor retired depreciable assets during Year 3
g. Retained earnings at the end of Year 3
h. Long-term debt at the end of Year 3
i. The income tax rate for Year 4
j. Purchases of inventories during Year 4

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EXHIBIT 10.8 Watson Corporation Partial Income Statements (Problem 10.15) Year 0 Year +1 Year +2 Year +3 Year +4 Actual Projected Projected Projected Projected Sales Cost of goods sold Selling and administrative Interest expense Income taxes Net Income $ 46,000 50,600 56,672 64,606 $74,943 29,900) (32,890) XXX (40,702) (46,465) (12,468) 3,567) (14,989) (3866 (5,227) 1,372) 2.265) 2,892) (10,580) 11638 (3,907 (4,298) (621) (565) EXHIBIT 10.9 Watson Corporation Partial Balance Sheets (Problem 10.15) Year 0 Year +1 Year +2 Year +3 Year +4 Actual Projected Projected Projected Projected ASSETS $1,200 $664206 416 S 1,262 8,000 8,433 7,500 8,223 8,855 Accounts receivable Inventories Fixed assets: 10,420 10,711 11,333 10,400 120,445 126,467 169,895 (33,100) (36,2 (37,917) 45,352) (50,938) Total Assets Liabilities and Shareholders' Equity Accounts payable Notes payable Other current liabilities Long-term debt 2,500 2,801 3,107 3,376 3,828 6,500 6,852 3,300 3,630 5,000 49,094 8,467 4,635 5,376 69,251 Total Liabilities Common stock Retained earnings $15,000 $17,233 $17,539 S22,434 S24,319 31,082 21,700 22,043 23 Total Shareholders' Equity Total Liabilities and Shareholders EXHIBIT 10.10 Watson Corporation Partial Statements of Cash Flows (Problem 10.15) Year Year +1 Year Year3 Year +4 Actual Projected Projected Projected Projected OPERATIONS Net income Depreciation Change in accounts receivable Change in inventories Change in accounts payable Change in other current liabilities 1,048 ,153 sxxxx 4,206 5,370 2,378 (394) 274 300 7,4355,586 (433)(422) 565 (,866) (723) (1.322 6 (622) 741 1,805 301 330 306 436 269 569 Cash Flow from Operations XXxxxx sxxxxXxXX xxX INVESTING Acquisition of fixed assets 9130)S(10456022)2476) (18,632) FINANCING Change in notes payable Change in long-term debt Change in common stock Dividends $ 320 3,721 2,029 2,233 750) 3352 S 343 ,272 1,515 4,094 24550,107 7,595 895 1,885 (891) 1,016) (.178) XXxx xxxX Cash Flow from Financing SXXXX S XXxX xxxx Change in Cash