Question
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt-equity ratio is held constant. CROSBY, INC. 2017 Income Statement Sales $ 754,000 Costs 610,000 Other expenses 24,500 Earnings before interest and taxes $ 119,500 Interest paid 10,400 Taxable income $ 109,100 Taxes (21%) 22,911 Net income $ 86,189 Dividends $ 42,540 Addition to retained earnings 43,649 CROSBY, INC. Balance Sheet as of December 31, 2017 Assets Liabilities and Owners Equity Current assets Current liabilities Cash $ 24,340 Accounts payable $ 57,800 Accounts receivable 33,670 Notes payable 14,900 Inventory 70,610 Total $ 72,700 Total $ 128,620 Long-term debt $ 102,000 Owners equity Fixed assets Common stock and paid-in surplus $ 97,000 Net plant and equipment $ 211,000 Retained earnings 67,920 Total $ 164,920 Total assets $ 339,620 Total liabilities and owners equity $ 339,620 Complete the pro forma income statements below. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
|
HOW TO YOU CALCULATE THE "ADD TO RE"?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started