A Firm Has Net Income of $439,000 on Sales of $690,000

Multiple Choice

A firm has net income of $439,000 on sales of $690,000. Sales are expected to increase by 4% next year and the dividend payout ratio is 40%. The firm uses the percentage of sales approach when compiling pro forma statements. What amount is expected to be added to retained earnings next year?

A) $241,300
B) $253,000
C) $273,936
D) $307,550
E) $322,048