Income Statement 2013 $7.000.000 Sales credit) 2.100.000 Fixed costs 4,200,000 variable costs 600 700,000 Earnings before interest and taxes 250,000 Less: interest 450,000 Earnings before taxes 157,500 Taxes a 35% Less: 292,500 Earnings after taxes 117,000 Dividends (40% payout) s 175.500 increased retained earnings Fixed costs include (a) lease expense of s200,000 and (b) depreciation of $500,000. its bond issue. The Note: Ryan Boots also has $65,000 per year in sinking fund obligations associated with tax-deductible. sinking fund represents an annual repayment of the principal amount of the bond. It is not