Last year a firm paid out $21.750 of common dividends and ended the year with $1

Question

Last year a firm paid out $21.750 of common dividends and ended the year with $187.500 of retained earnings versus the prior years retained earnings of $132.250. How much net income did the firm earn during the year? Select one: a. $77,000 O b. $80,850 . $84.893 O d. $89.137 O e, $93.594 A firm recently reported $12.500 of sales, $7.250 of operating costs other than depreciation, and $1,000 of depreciation. The company had no amortization charges and no non-operating income. It had $8,000 of bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state income tax rate was 40%, How much was its operating income, or EBIT? Select one: A$3,462 B. $3.644 C. $3.836

Explanation / Answer

1.Ending retained earnings=Beginning retained earnings+Net income-Dividends

187500=132250+Net income-21750

Net income=(187500+21750-132250)

which is equal to

=$77000.

2.

Sales 12500 Less:operating cost (7250) Less:depreciation (1000) EBIT $4250.

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

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