2. National Importers has sales of $609,600, costs of $548,150, depreciation exp

ID: 2820848 • Letter: 2

Question

2. National Importers has sales of $609,600, costs of $548,150, depreciation expense of $35,100, and interest paid of $12,400. The tax rate is 28 percent. How much net income did the firm earn for the period? 3. The Comfy Inn had beginning retained earnings of $18,670. During the year, the company reported sales of $93,490, 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? 2. National Importers has sales of $609,600, costs of $548,150, depreciation expense of $35,100, and interest paid of $12,400. The tax rate is 28 percent. How much net income did the firm earn for the period? 3. The Comfy Inn had beginning retained earnings of $18,670. During the year, the company reported sales of $93,490, 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? 2. National Importers has sales of $609,600, costs of $548,150, depreciation expense of $35,100, and interest paid of $12,400. The tax rate is 28 percent. How much net income did the firm earn for the period? 3. The Comfy Inn had beginning retained earnings of $18,670. During the year, the company reported sales of $93,490, 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?

Explanation / Answer

2. Net income = (sales - costs - depreciation - interest)*(1-tax rate)

Thus net income = $10,044

3. We will first compute net income earned during the year.

Retained earnings balance at the end of the year = opening balance+net income - dividends

= 18670+10827.30-950

= $28,547.30

Sales 609,600.00 less: costs 548,150.00 EBITDA 61,450.00 less: depreciation 35,100.00 EBIT 26,350.00 less: interest 12,400.00 PBT 13,950.00 less: tax @ 28% 3,906.00 Net income 10,044.00

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2. National Importers has sales of $609,600, costs of $548,150, depreciation exp

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