Question

Pharrell, inc., has sales of $601,000, costs of $257,000, depreciation expense of $63,000, interest expense of $30,000, and a tax rate of 35 percent. The firm paid out $44,000 in cash dividends. What is the addition to retained earnings?

Answer 1

$119,150

Step-by-step explanation:

Addition to Retained Earnings shall be:

Particulars Amount$

Sales 601,000

Less: Costs 257,000

EBDIT 344,000

Less: Depreciation 63,000

EBIT 281,000

Less: Interest 30,000

EBT 251,000

Less: Tax at 35% 87,850

EAT 163,150

Less: Cash Dividend 44,000

Retained Earnings $119,150