Answer:
$35,000
Explanation:
Gross Profit:
= Sales - Cost of Goods sold
= $560,000 - $400,000
= $160,000
Income before tax:
= Gross Profit - Salary Expense - Interest expense
= $160,000 - $40,000 - $30,000
= $90,000
Income after tax:
= Income before tax - Tax
= $90,000 - $25,000.
= $65,000
Transfer to Retained Earnings:
= Income after tax - Dividend
= $65,000 - $30,000
= $35,000
Closing Retained Earnings:
= Net Income (After tax) - Dividend payment
= $65,000 - $30,000
= $35,000
