Calculation of addition to retained earnings:
It is given that Griffin's Goat Farm, Inc., has sales of $671,000, costs of $333,000, depreciation expense of $77,000, interest expense of $48,500, a tax rate of 24 percent, and paid out $44,500 in cash dividends.
The addition to retained earnings can be calculated as follows:
Sales $671,000
Less: Costs $333,000
Less: Depreciation Expense $77,000
Less: Interest Expense $48,500
Profit before tax = $212,500
Less: Tax (212500*24%) = $51,000
Net Profit = $161500
Less: Dividends $44,500
Net Addition to the retained earnings = $117,000
Hence, in addition to retained earnings is $117,000
