Question

Griffin's Goat Farm, Inc., has sales of $796,000, costs of $327,000, depreciation expense of $42,000, interest expense of $34,000, a tax rate of 21 percent, and paid out $95,000 in cash dividends. What is the addition to retained earnings

Answer 1

Answer:

The addition to retained earnings is 310,470.

Explanation:

Total Addition to retained earning is net income  for the period.

Subtract all the expenses from sales value to reach at net income value.

Sales                                  $796,000

Costs                                 ($327,000)

Depreciation expense      $42,000)

Interest expense               ($34,000)

Income before tax             $393,000

Tax rate 21 %,                     $82,530  

Net Income                         $310,470

Addition to Retained Earning is $310,470