Green Grass Inc has sales of 626000 costs of 249000 deprecia

Green Grass, Inc., has sales of $626,000, costs of $249,000, depreciation expense of
$27,000, interest expense of $12,000, and a tax rate of 32 percent. (Do not include the dollar sign ($).)
If the firm paid out $58,000 in cash dividends, the addition to retained earnings is $ _____ .

Solution

Sales = 626000

less: cost of goods sold = 249000

Gross profit = 377000

less: Depreciatiom = 27000

EBIT = 350000

less: interest = 12000

EBT = 338000

less: tax = 108160

Net income = $229840

Net income = dividend + addition to retained earning

  addition to retained earning = net income - dividend

= $229840 - $58,000

= $171840