Question

Sidewinder, Inc., has sales of $658,000, costs of $334,000, depreciation expense of $79,000, interest expense of $44,000, and a tax rate of 21 percent. The firm paid out $74,000 in cash dividends. What is the addition to retained earnings? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Answer 1

Answer:

The addition to retained earnings is $84,790.

Explanation:

Sales of                                          $658,000

Costs of                                          ($334,000)

Gross Income                                $324,000

Depreciation expense                  ($79,000)

Income before interest and Tax   $245,000

Interest expense                           ($44,000)

Income before tax                          $201,000

Tax 21 %                                         ($42,210)  

Net Income                                     $158,790

Addition to retained Earning =  Net Income -  dividend paid

Addition to retained Earning =  $158,790 -  $74,000

Addition to retained Earning =  $84,790