MINDTAP Assignment 03-Financial Statements, Cash Flow, and Taxes Consider the fo
ID: 2330616 • Letter: M
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MINDTAP Assignment 03-Financial Statements, Cash Flow, and Taxes Consider the folowing scenanio: Cute Camel Woodcat Company's income statement reports data for is fest year of operation. The frm's CEO would Sike sa es to increase Carne' isable to achieve this level of increased sales, but its interest mits ease rom 10% to 19% of taxes (HRIT) The company's opera ng osts (edudng 2. Kalon and amotaster) rman at 70% .et-es, and is depreciation and innaton emai n constant from year to year 3. The company's tax rate romans constant at 40% of its pre tax aone or earNngs before tases (FAT). 4 In Year 2, Cute Camel expects to pay 300,000 and $768,825 of preferred and common soock dividends, respectively Complete the Year 2 income statement data for Cate Camel, then answer the s questions that follow. Be sure to round each dollar value to the nearest whole Cute Camel Woodcraft Company Income Statement for Year Ending December 31 Year 2 (Forecasted) Net saies 10,000,000 ,000,000 400,000 $2,600,000 12,500,000 ess: Operating costs, exct depreclation and amortization Less: Depreciation and amortization expeses Operating income (or EBIT) Less: Interest expense 408,750 2.316,250 926,500 Pre-tax income (or EST Earnings after taxes Earmings available to common shareholders Contribution to retained earnings 2,340,000 Less: Taxes (40%) 1,404,000 Less: Preferred stock dividends 1,104,000 631,800 $472,200 Less: Common stock dividends $639,675 MacBook AiExplanation / Answer
(a) Earning after Tax 1,389,750
Less:preffered stock Dividends 300,000
Earnings available for common shareholders 1,089,750
Less: common stock dividends 450,075
Contribution to retained earnings 639,675
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