Question

Sidewinder, Inc., has sales of $670,000, costs of $337,000, depreciation expense of $82,000, interest expense of $47,000, and a tax rate of 24 percent. The firm paid out $77,000 in cash dividends and has 36,800 shares of common stock outstanding.

What is the addition to retained earnings?

Answer 1

Additions to Retained earnings $78,040

Step-by-step explanation:

The additions to the retained earnings of Sidewinder, Inc can be calculated as follows

Sales $670,000

Costs ($337,000)

Depreciation expense ($82,000)

Interest expense ($47,000)

Profit before tax $204,000

Tax@24% ($48,960)

Profit after tax $155,040

Less:Dividends ($77,000)

Additions to Retained earnings $78,040