Falcon's projected 20X5 sales are $678 and its 20X4 year-end retained earnings were $1,385. If Falcon projects a 7 percent return on sale (ROS) and expects to pay $12 in total dividends in 20X5, forecast 20X5 year-end retained earnings.

Question

Quizplus · Accepted Answer

1. Calculate the net income for 20X5: 
Net income = 678 * 7% = 47.46

2. Calculate the 20X5 year-end retained earnings: 
Retained earnings = 20X4 year-end retained earnings + net income - dividends 
Retained earnings = 1385 + 47.46 - 12 = 1420.46

Therefore, the answer is C, $1,420.46.

Falcon's Projected 20X5 Sales Are $678 and Its 20X4 Year-End