Question
You have been given the following information for PattyCakes Athletic Wear Corp. for the year 2018: Net sales = $38,700,000. Cost of goods sold =
You have been given the following information for PattyCakes Athletic Wear Corp. for the year 2018:
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Net sales = $38,700,000.
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Cost of goods sold = $22,180,000.
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Other operating expenses = $6,000,000.
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Addition to retained earnings = $1,206,500.
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Dividends paid to preferred and common stockholders = $1,933,000.
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Interest expense = $1,830,000.
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The firms tax rate is 30 percent.
In 2019:
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Net sales are expected to increase by $9.70 million.
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Cost of goods sold is expected to be 60 percent of net sales.
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Depreciation and other operating expenses are expected to be the same as in 2018.
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Interest expense is expected to be $2,105,000.
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The tax rate is expected to be 30 percent of EBT.
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Dividends paid to preferred and common stockholders will not change.
Calculate the addition to retained earnings expected in 2019.
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