Consider the following income statement for the Heir Jordan Corporation: Conside

Question

Consider the following income statement for the Heir Jordan Corporation:

Consider the following income statement for the Heir Jordan Corporation:

Consider the following income statement for the Heir Jordan Corporation: The projected sales growth rate is 10 percent. Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio constant. (Input all amounts as positive values. Do not round intermediate calculations.) What is the projected addition to retained earnings? (Do not round intermediate calculations.)

Explanation / Answer

Proforma Income Statement: (Amt in $)

Sales ($42000 + 10%*$42000) 46200

Costs ($32800 + 105*32800) 36080

Taxable Income 10120

Tax @ 35% 3542

Net Income 6578

Dividends $1800/5980 * 6578 = $1680

Retained Earnings $6578 - $1680 = $4898

Addition to Retained Earnings $4898

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