Question

AV Sales has net revenue of $513,000 and costs of $406,800. The depreciation expense is $43,800,interest paid is $11,200, and dividends for the year are$4,500. The tax rate is 33 percent. What is the addition to retained earnings?

Answer 1

Answer:

addition to retained earnings is $34,304

Explanation:

 Revenue                        =  $513,000

- Costs                              = $406,800

Gross Profit                       =  $106200

-  Depreciation expense  =   $43,800

-   Interest paid                  =   $11,200

Profit before tax                =   $51,200

-   Tax 33%                         =   $16,896

Profit after tax                    =   $34,304

*Profit after tax is actually addition to Retained earning the dividend payment is made from the Retained earning account after that.