Question

You have been given the following information for Nicole's Neckties Corp.: Net sales = $2,500,000; Cost of goods sold = $1,300,000; Addition to retained earnings = $30,000; Dividends paid to preferred and common stockholders = $300,000; Interest expense = $50,000. The firm's tax rate is 40 percent. What is the depreciation expense for Nicole's Neckties Corp.?

Answer 1

$360,000

Step-by-step explanation:

Net sales : $2,500,000

Cost of goods sold : ($1,300,000)

Gross profit : $ 1,200,000

Interest expense : ($50,000)

Net profit : $ 1, 150,000

Retained earning: ($30,000)

Dividends paid : ($300,000)

Tax at 40%: =40% * $1,150,000

($460,000)

Depreciation expense : $360,000