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View Full Version : Cash dividends and retained earnings


Pacino12
Sep 21, 2010, 02:18 PM
Papa Roach Exterminators, Inc. has sales of $512,000, costs of $265,000, depreciation expense of $32,000, interest expense of $20,000, and a tax rate of 35 percent.

If the firm paid out $63,000 in cash dividends, the addition to retained earnings is $_____?

morgaine300
Sep 22, 2010, 03:29 AM
Please read the guidelines for posting homework that are at the top of this forum:
https://www.askmehelpdesk.com/finance-accounting/announcement-font-color-ff0000-u-b-read-first-expectations-homework-help-board-b-u-font.html

pready
Sep 22, 2010, 02:33 PM
First you need to calculate EBIT, then you calculate the amount of taxes, then you can calculate Net Income.

You will subtract your cash dividends from your Net Income and you will arrive at your answer.

markjrivera
Sep 30, 2010, 03:17 AM
The payment of dividends to the shareholders is immaterial to the problem.