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19 March, 09:59

Sidewinder, Inc., has sales of $658,000, costs of $334,000, depreciation expense of $79,000, interest expense of $44,000, and a tax rate of 21 percent. The firm paid out $74,000 in cash dividends. What is the addition to retained earnings? (Do not round intermediate calculations and round your answer to the nearest whole number, e. g., 32.)

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  1. 19 March, 10:48
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    The addition to retained earnings is $84,790.

    Explanation:

    Sales of $658,000

    Costs of ($334,000)

    Gross Income $324,000

    Depreciation expense ($79,000)

    Income before interest and Tax $245,000

    Interest expense ($44,000)

    Income before tax $201,000

    Tax 21 % ($42,210)

    Net Income $158,790

    Addition to retained Earning = Net Income - dividend paid

    Addition to retained Earning = $158,790 - $74,000

    Addition to retained Earning = $84,790
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