Question

Frye, Inc., has Sales of $625,000, Costs of Goods Sold of $260,000, Depreciation Expense of $79,000, Interest Expense of $43,000, and an average tax rate of 35 percent. If the firm's beginning balance in Retained Earnings for the year was $200,000 and paid out $60,000 in cash dividends, how much is the firm's ending balance in Retained Earnings for the year?

Answer 1

Answer:

Ending RE : 297,950

Explanation:

Sales               625,000

COGS             (260,000)

Dep Expense   (79,000)

Interest Exp      (43,000)

EBT                   243,000

Tax Expense    (85,050)

Net Income       157,950‬

beginning retained earning      200,000

+ net income                                157,950

- dividends                                 (60,000)  

ending RE                                    297,950