For pro forma purposes, the Martin-Jones Company uses a 7.5% profit margin and a 60 percent dividend payout ratio. Sales for next year are projected to be $267,000. What is the projected addition to retained earnings?

A) $8,010
B) $8,660
C) $9,120
D) $12,015
E) $12,455

Question

Erika Sanchez · Accepted Answer

Final Answer : A, Explanation :  Net income = $267,000 * 7.5% = $20,025Dividends = $20,025 * 60% = $12,015Addition to retained earnings = $20,025 - $12,015 = $8,010

For pro forma purposes, the Martin-Jones Company uses a 7.5% profit margin and a 60 percent dividend payout ratio. Sales for next year are projected to be $267,000. What is the projected addition to retained earnings?

A) $8,010
B) $8,660
C) $9,120
D) $12,015
E) $12,455

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For pro forma purposes, the Martin-Jones Company uses a 7.5% profit margin and a 60 percent dividend payout ratio. Sales for next year are projected to be $267,000. What is the projected addition to retained earnings?A) $8,010B) $8,660C) $9,120D) $12,015E) $12,455

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Learning Objectives

Learning Objectives

Related questions

For pro forma purposes, the Martin-Jones Company uses a 7.5% profit margin and a 60 percent dividend payout ratio. Sales for next year are projected to be $267,000. What is the projected addition to retained earnings?

A) $8,010
B) $8,660
C) $9,120
D) $12,015
E) $12,455