BUSINESS FINANCE HOMEWORK HELP?

Company finished 06 w/ the net distinction prior to taxes $218,000. Subject to 40% taxation rate as well as contingency compensate $32,000 in elite batch dividends prior to gain upon the 85,000 shares of usual batch outstanding. If the organisation paid usual batch dividends of $0.80 per share, how most dollars would go to defended earnings. I need to see the work otherwise, I will never figure out how to do this in the future.

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Sandy May 4, 2010 at 6:22 pm

Dividends are paid only after taxes have been paid.

Profit before tax $218,000
Tax at 40% ($87,200)
Profit after tax $130,800
Less:
Preferred stock dividend ($32,000)
Common stock dividend ($68,000) – 85,000 shares x $0.80
Bal. to go to Retained Earnings $30,800

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