You are given the following information for Bowie Pizza Co.: Sales = $76,000; Costs = $33,100; Addition to retained earnings = $6,900; Dividends paid = $2,340; Interest expense = $5,600; Tax rate = 22 percent. Calculate the depreciation expense.

You are given the following information for Bowie Pizza Co.: Sales = $76,000; Costs = $33,100; Addition to retained earnings = $6,900; Dividends paid = $2,340; Interest expense = $5,600; Tax rate = 22 percent. Calculate the depreciation expense. (Do not round intermediate calculations.)

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Expert Solution

net income = additions to retained earnings+dividends paid

net income =6900+2340= $9240

tax rate = 22%

EBT= net income/1-tax rate

EBT=9240/1-22% =11846.15

interst expenses is $5600

EBIT=EBT+Interst

EBIT=11846.15+5600=17446.15

EBIT= sales-costs-depreciation

17446.15=76000-33100-depreciation

depreciation=25453.8462

Depreciation of Bowie pizza co is $25453.85

jeff jeffy answered 2 years ago

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