A list of Year 3 revenues and expenses for Green Thumb, Inc. is provided below. Advertising and Promotion Expenses $ 263,700
Income Tax Expense 56,620
Interest Expense 44,020
Other Expenses 123,600
Other Selling & Administrative Expenses 352,000
Sales Revenue 1,871,300
Salaries and Wages Expense 726,000
Required:
1. Calculate the net income for the Green Thumb, Inc. for Year 3.
2. Prepare a statement of retained earnings for Green Thumb, Inc. for Year 3. Assume the company had retained earnings of $163,200 as of January 1, Year 3, and paid out $46,120 in dividends during Year 3.

a.                               Green Thumb

                       Net Income for the year 3

Particulars                                      Amount

Sales revenue                                                     $1,871,300

Operating expenses

Advertising expense                    $263,700

Salaries and wages expense      $726,000

Other selling expenses                $352,000

Other expenses                            $123,600      $1,465,300

Earnings before interest and taxes                   $406,000

Interest expense                                                 $44,020    

Earnings before taxes                                         $361,980

Income tax expense                                            $56,620

Net Income                                                           $305,360

b.                         Green Thumb Inc.

                Statement of retained earnings

             For the year ended Dec 31, Year 3

Retained Earnings, Jan 1 year 3      $163,200

Add: Net Income                              $305,360

Less: Dividend paid                          $46,120

Retained Earnings, Dec 31 year 3  $422,440

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