The Embroidery Shoppe had beginning retained earnings of $18,670. During the year, the company reported sales...

The Embroidery Shoppe had beginning retained earnings of $18,670. During the year, the company reported sales of $83,490, costs of $68,407, depreciation of $8,200, dividends of $950, and interest paid of $478. The tax rate is 34 percent. What is the retained earnings balance at the end of the year?

Expert Solution

Particulars	Amount	Formula	Calculation
Sales	$ 83,490.00	Given
Cost	$ 68,407.00	Given
EBDIT	$ 15,083.00	Sales - Cost	83490 - 68407
Dep	$ 8,200.00	Given
EBIT	$ 6,883.00	EBDIT - Dep	15083 - 8200
Int	$ 478.00	Given
EBT	$ 6,405.00	EBIT - Int	6883 - 478
Tax	$ 2,177.70	EBT * Tax rate	6405 * 34 %
EAT or Net Income	$ 4,227.30	EBT - Tax	6405 - 2177.7
Div Paid	$ 950.00	Given
Addition to Retained Earnings	$ 3,277.30	Net Income - Div	155800 - 42000

Opening RE = 18670

Retained Earnings balance = CY RE addition + Opeining RE

= 18670 + 3277.30

= 21947.30

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jeff jeffy answered 1 year ago

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