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What is the projected addition to retained earnings

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Reference no: EM132607557

The following is the most recent Statement of Comprehensive Income for FishKing Corp.

Sales                                $47,000

Cost of Goods                     31,300

Taxable Income                   15,700

Taxes                                  5,495

Net Income                        $10,205

Dividends                              $2,500

Retained Earnings                     7,705

The CFO asks you to put together a pro forma statement of comprehensive income for next year projecting a 20% increase in sales. The CFO instructs you to assume that costs will vary with sales and that the dividend payout ratio will remain constant.

Question (i) What is the projected addition to retained earnings? Show all your work by completing a proforma Statement of Comprehensive Income.

Question (ii) If the CFO wants to have $11,000 in addition to Retained Earnings next year, what should the Dividend Payout Ratio be?

Reference no: EM132607557

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