Question

Suppose you are given the following information for panola Bread sales $30,000; Cost $10,000;addition to retained earnings 4,365; dividends paid $485; interest expense $1,200; tax rate 30 percent. What is the amount of the depreciation expense? can you show the work?

can you show work​

Answer 1

Depreciation expense = 12,564

Step-by-step explanation:

Addition to retained earnings is basically net income. Starting with this, we can calculate tax expense i.e 1,871 (4,365/0.7*0.3). As tax rate is 30% so net income left would be 70%. After determining tax amount we can easily calculate depreciation expense by reverse working which is as below:

Net income 4,365

Add:Tax 1,871

Add:Interest 1,200

Add: Cost 10,000

Less: Sales -30,000

Depreciation 12,564