Shelton, Inc., has sales of $398,000, costs of $186,000, depreciation expense of $51,000, interest expense of...

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Shelton, Inc., has sales of $398,000, costs of $186,000, depreciation expense of $51,000, interest expense of...

Shelton, Inc., has sales of $398,000, costs of $186,000, depreciation expense of $51,000, interest expense of $32,000, and a tax rate of 40 percent. (Do not round intermediate calculations.)

What is the net income for the firm?

Net income

$

Suppose the company paid out $41,000 in cash dividends. What is the addition to retained earnings?

Addition to retained earnings

$

business finance

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Answer 1

Answer #1

a.net income from the firm:

sales	398,000
less:costs	(186,000)
depreciation expense	(51,000)
EBIT	161,000
interest expense	(32,000)
EBT	129,000
less: tax @40%	(51,600)
net income	77,400

b.

net income	77,400
less:dividends	(41,000)
addition to retained earnings	36,400

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Answer 2

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