Consider the following income statement for the Heir Jordan Corporation HEIR JOR

Question

Consider the following income statement for the Heir Jordan Corporation HEIR JORDAN CORPORATION Income Statement Sales Costs $47,900 33,900 Taxable income Taxes (35%) $14,000 4,900 Net income $ 9,100 Dividends Addition to retained earnings $ 2,300 6,800 The projected sales growth rate is 15 percent. Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant. HEIR JORDAN CORPORATION Pro Forma Income Statement Sales Costs Taxable income Taxes Net income What is the projected addition to retained earnings? Retained earnings

Explanation / Answer

Ans:

Particulars

Amounts

Sales

$            55,085.00

Costs

$            33,900.00

Income tax 35%

$              7,415.00

Net Income

$            13,770.00

Calculation of retained earnings:

Dividend remains unchanged = $2,300

Addition to retained earnings = 11,470

Particulars

Amounts

Sales

$            55,085.00

Costs

$            33,900.00

Income tax 35%

$              7,415.00

Net Income

$            13,770.00

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.