Griffin's Goat Farm, Inc., has sales of $671,000, costs of $333,000, depreciation expense of $77,000, interest expense of $48,500, a tax rate of 24 percent, and paid out $44,500 in cash dividends. What is the addition to retained earnings

Question

Business

Jesus Odom

14 October, 09:40

Griffin's Goat Farm, Inc., has sales of $671,000, costs of $333,000, depreciation expense of $77,000, interest expense of $48,500, a tax rate of 24 percent, and paid out $44,500 in cash dividends. What is the addition to retained earnings

+1

Answers (1)

Know the Answer?

Alexandra Webb · Answer 1

Calculation of addition to retained earnings:

It is given that Griffin's Goat Farm, Inc., has sales of $671,000, costs of $333,000, depreciation expense of $77,000, interest expense of $48,500, a tax rate of 24 percent, and paid out $44,500 in cash dividends.

The addition to retained earnings can be calculated as follows:

Sales $671,000

Less: Costs $333,000

Less: Depreciation Expense $77,000

Less: Interest Expense $48,500

Profit before tax = $212,500

Less: Tax (212500*24%) = $51,000

Net Profit = $161500

Less: Dividends $44,500

Net Addition to the retained earnings = $117,000

Hence, in addition to retained earnings is $117,000