Billy's Exterminator's, Inc., has sales of $734,000, costs of $315,000, depreciation expense of $48,000, interst expense of $35,000, and a tax rate of 35 percent. what is the net income?

Answer:

Sales $734,000

- Costs of good sold $315,000

Gross profit $419,000

- Depreciation expense $48,000

Operating Income $371,000

- Interst expense $35,000

Income before tax $336,000

- tax @35% $117,600

Net Income $218,400

Suppose this firm in the previous question paid out $85,000 in cash dividends. What is the addition to the retained earnings?