During the year, Belyk Paving Co. had sales of $2,382,000. Cost of goods sold, a

Question

During the year, Belyk Paving Co. had sales of $2,382,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,443,000, $436,800, and $491,800, respectively. In addition, the company had an interest expense of $216,800 and a tax rate of 30 percent (ignore any tax loss carryback or carryforward provisions.). Belyk Paving Co. paid out $369,000 in cash dividends. Assume that net capital spending was zero, no new investments were made in net working capital, and no new stock was issued during the year. (Enter your answer as directed, but do not round intermediate calculations.)

Calculate the firm's new long-term debt added during the year.

During the year, Belyk Paving Co. had sales of $2,382,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,443,000, $436,800, and $491,800, respectively. In addition, the company had an interest expense of $216,800 and a tax rate of 30 percent (ignore any tax loss carryback or carryforward provisions.). Belyk Paving Co. paid out $369,000 in cash dividends. Assume that net capital spending was zero, no new investments were made in net working capital, and no new stock was issued during the year. (Enter your answer as directed, but do not round intermediate calculations.)

Explanation / Answer

net sales = 2382000
expenses = 1443000 + 436800 + 491800 = 2371600
interest expense = 216800
tax rate = 30%
dividends = 369000

income before tax = -206400 = 2382000 - 2371600 - 216800
no tax ..-ve profits
net income after cash dividends paid = -206400 - 369000 = -575400

so debt increases by $575,400

SO the firm's new long-term debt added during the year = $575,400

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