#4 In looking at the ABC Company, you find that they reported net income of They had incurred cost of goods sold in the amount of There were cash dividends paid in the amount of The common shares outstanding at the time were What were the addition to Retained Earnings? $456,897 $102,954 $235,678 $100,000
#4 In looking at the ABC Company, you find that they reported net income of They had incurred cost of goods sold in the amount of There were cash dividends paid in the amount of The common shares outstanding at the time were What were the addition to Retained Earnings? $456,897 $102,954 $235,678 $100,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![**Financial Analysis Case Study: ABC Company**
---
*In looking at the ABC Company, you find that they reported the following financial information:*
- **Net Income:** $456,897
- **Cost of Goods Sold (COGS):** $102,954
- **Cash Dividends Paid:** $235,678
- **Common Shares Outstanding:** $100,000
---
### Analysis:
**Calculation of Additions to Retained Earnings:**
Retained Earnings are calculated by taking the Net Income and subtracting any dividends paid out. In this scenario, the formula will be as follows:
\[ \text{Additions to Retained Earnings} = \text{Net Income} - \text{Dividends Paid} \]
Using the provided figures:
\[ \text{Additions to Retained Earnings} = \$456,897 - \$235,678 = \$221,219 \]
Therefore, the addition to Retained Earnings for ABC Company is **$221,219**.
### Summary:
- **Net Income:** The company reported a net income of $456,897, which is the profit after all expenses have been deducted.
- **Cost of Goods Sold (COGS):** The cost incurred to produce the goods sold amounted to $102,954.
- **Dividends:** Cash dividends paid out to shareholders totaled $235,678.
- **Common Shares Outstanding:** There were 100,000 common shares outstanding at this time.
- **Retained Earnings Addition:** After accounting for dividends paid out, the retained earnings increased by $221,219.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F78db42f9-6d62-48c9-a117-b436e469106b%2Ff0c96b5a-c833-4eb1-b309-e0f691511185%2Fnmkmzh5h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Financial Analysis Case Study: ABC Company**
---
*In looking at the ABC Company, you find that they reported the following financial information:*
- **Net Income:** $456,897
- **Cost of Goods Sold (COGS):** $102,954
- **Cash Dividends Paid:** $235,678
- **Common Shares Outstanding:** $100,000
---
### Analysis:
**Calculation of Additions to Retained Earnings:**
Retained Earnings are calculated by taking the Net Income and subtracting any dividends paid out. In this scenario, the formula will be as follows:
\[ \text{Additions to Retained Earnings} = \text{Net Income} - \text{Dividends Paid} \]
Using the provided figures:
\[ \text{Additions to Retained Earnings} = \$456,897 - \$235,678 = \$221,219 \]
Therefore, the addition to Retained Earnings for ABC Company is **$221,219**.
### Summary:
- **Net Income:** The company reported a net income of $456,897, which is the profit after all expenses have been deducted.
- **Cost of Goods Sold (COGS):** The cost incurred to produce the goods sold amounted to $102,954.
- **Dividends:** Cash dividends paid out to shareholders totaled $235,678.
- **Common Shares Outstanding:** There were 100,000 common shares outstanding at this time.
- **Retained Earnings Addition:** After accounting for dividends paid out, the retained earnings increased by $221,219.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 3 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education