Business Finance Homework Help?
Company ended 06 w/ a net profit before taxes $218,000. Subject to 40% tax rate and must pay $32,000 in preferred stock dividends before earnings on the 85,000 shares of common stock outstanding. If the firm paid common stock dividends of $0.80 per share, how many dollars would go to retained earnings. I need to see the work otherwise, I will never figure out how to do this in the future.
Public Comments
- 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
