Question

A company has sales of $729,000, costs of $355,000, depreciation expense of $50,000, interest expense of $28,000, and a tax rate of 35 percent. If the firm paid out $71,000 in cash dividends. Net Income was $192,400. What is the addition to retained earnings?

Answer 1

Answer:

The addition to retained earnings is $121,400.

Explanation:

Net Income = $192,400

Dividend = $71,000

use Following formula to calculate the addition to retained earning

Addition to Retained Earning = Net Income - Dividend paid

Addition to Retained Earning = $192,400 - $71,000

Addition to Retained Earning = $121,400

So, the addition to retained earnings is $121,400