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30 August, 23:06

AV Sales has net revenue of $513,000 and costs of $406,800. The depreciation expense is $43,800, interest paid is $11,200, and dividends for the year are$4,500. The tax rate is 33 percent. What is the addition to retained earnings?

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  1. 30 August, 23:20
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    addition to retained earnings is $34,304

    Explanation:

    Revenue = $513,000

    - Costs = $406,800

    Gross Profit = $106200

    - Depreciation expense = $43,800

    - Interest paid = $11,200

    Profit before tax = $51,200

    - Tax 33% = $16,896

    Profit after tax = $34,304

    *Profit after tax is actually addition to Retained earning the dividend payment is made from the Retained earning account after that.
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