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You have been given the following information for PattyCake’s Athletic Wear Corp. for the year 2018: Net...

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Finance

You have been given the following information for PattyCake’sAthletic Wear Corp. for the year 2018:

  1. Net sales = $38,550,000.

  2. Cost of goods sold = $22,150,000.

  3. Other operating expenses = $5,700,000.

  4. Addition to retained earnings = $1,203,500.

  5. Dividends paid to preferred and common stockholders =$1,925,500.

  6. Interest expense = $1,815,000.

  7. The firm’s tax rate is 30 percent.

In 2019:

  1. Net sales are expected to increase by $9.55 million.

  2. Cost of goods sold is expected to be 60 percent of netsales.

  3. Depreciation and other operating expenses are expected to be thesame as in 2018.

  4. Interest expense is expected to be $2,090,000.

  5. The tax rate is expected to be 30 percent of EBT.

  6. Dividends paid to preferred and common stockholders will notchange.

Calculate the addition to retained earnings expected in2019.

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