Income Statement 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 is not explicitly given in the income statement, but it can be calculated using the following formula:Depreciation expense = Net income - Dividends paid to preferred and common stockholders - Addition to retained earningsNet income = Net sales - Cost of goods sold - Interest expenseNet income = $25,500,000 - $10,250,000 - $2,000,000 = $13,250,000Depreciation expense = $13,250,000 - $500,000 - $305,000 = $12,445,000The closest answer choice is A) $12,100,000, which is the correct answer.

Income Statement You Have Been Given the Following Information for Fina's