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25 September, 09:43

Sidewinder, Inc., has sales of $686,723, costs of $335,000, depreciation expense of $80,000, interest expense of $45,000, and a tax rate of 22 percent. The firm paid out $81,093 in cash dividends. What is the addition to retained earnings

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  1. 25 September, 10:13
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    The addition to retained earnings is $95,751.

    Explanation:

    Addition to the retained earning is the net value of net earning of the year and dividend payment.

    Net income

    Sales $686,723

    Costs ($335,000)

    Gross income $351,723

    Depreciation Expense ($80,000)

    Income before interest and tax $271,723

    Interest Expense ($45,000)

    Income before tax $226,723

    Tax 22% ($49,879)

    Net Income $176,844

    Addition to Retained Earning = Net Income - Dividend Payment

    Addition to Retained Earning = $176,844 - $81,093

    Addition to Retained Earning = $95,751
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