Green Grass Inc has sales of 485000 costs of 304000 deprecia

Green Grass, Inc., has sales of $485,000, costs of $304,000, depreciation expense of $25,000, interest expense of $18,000, and a tax rate of 32 percent. (Do not include the dollar sign ($).) If the firm paid out $55,000 in cash dividends, the addition to retained earnings is $ _____ .

Solution

Sales 485000 Less:costs (304000) Less:depreciation expense (25000) Earnings before interest and taxes $156000 Less:interest expense (18000) Earnings before  taxes $138000 Less:taxes@32% ($44160) Net income $93840 Less:Dividends (55000) Addiiton to retained earnings $38840