You have been given the following information for Fina's Furniture Corp.: Net sales = $25,500,000; Cost of goods sold = $10,250,000; Addition to retained earnings = $305,000; Dividends paid to preferred and common stockholders = $500,000; Interest expense = $2,000,000. The firm's tax rate is 30 percent. What is the depreciation expense for Fina's Furniture Corp.?
A) $12,100,000
B) $12,400,000
C) $14,100,000
D) $14,400,000

Question

Quizplus · Accepted Answer

Depreciation expense = Net income - Addition to retained earnings - Dividends paid to preferred and common stockholders + Interest expense= (Net sales - Cost of goods sold - Interest expense) * (1 - Tax rate) - Addition to retained earnings - Dividends paid to preferred and common stockholders + Interest expense= ($25,500,000 - $10,250,000 - $2,000,000) * (1 - 0.30) - $305,000 - $500,000 + $2,000,000= $12,100,000

You Have Been Given the Following Information for Fina's Furniture