Answer:
HEIR JORDAN CORPORATION
Income Statement
Sales $ 48,500 * 120%....................58,200
Costs 34,500 * 120%........................<u>41,400</u>
Taxable income $ 14,000...............<u>16,800</u>
Taxes (35%) 4,900 ...........................5,880
Net income $ 9,100 ........................<u>10,920</u>
Dividends $ 2,900 ..(31.87%)..........3,480
Former Addition to retained earnings 6,200
New Addition to retained earnings 7,440
Explanation:
Consider the following financial statement for Heir Jordan Corporation.
HEIR JORDAN CORPORATION
Income Statement
Sales $ 48,500 * 120%....................58,200
Costs 34,500 * 120%........................<u>41,400</u>
Taxable income $ 14,000...............<u>16,800</u>
Taxes (35%) 4,900 ...........................5,880
Net income $ 9,100 ........................<u>10,920</u>
Dividends $ 2,900 ..(31.87%)..........3,480
Former Addition to retained earnings 6,200
New Addition to retained earnings 7,440
Pay out ratio is 31.87% of Net income which is derived by Dividends/Net Income
