What is projected addition to retained earnings

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Calculating Retained Earnings from Pro Forma Income

Consider the following income statement for the Heir Jordan Corporation:

HEIR JORDAN CORPORATION

Income Statement

Sales


$24,000

Costs


13,500

Taxable income


$10,500

Taxes (34%)


3,570

Net income


$ 6,930

Dividends

$2,426


Addition to retained earnings

4,504


A20 percent growth rate in sales is projected. Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant. What is the projected addition to retained earnings?

Reference no: EM13515341

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