Last year, johnson mills had annual revenue of $37,800, cost of goods sold of $23,200, and administrative expenses of $6,300. the firm paid $700 in dividends and had a tax rate of 35 percent. the firm added $2,810 to retained earnings. the firm had no long-term debt. what was the depreciation expense?

Depreciation expense = 2,900

Explanation:

Our goal would be to construct the formula where depreciation expense is and then increase deepth until find something we can work:

Expanding expenses we find depreciation expense

Here we don't Know Income Before taxes so we have to work that first

Here we don't Know Net Income taxes so we have to work that first

Here we got the other component of the formula, so it is possible to solve for net income and from there achieve the answer

Net income = 2,810 + 700 = 3,510

Income before taxes = 3,510/0.65 = 5,400

37,800 - 23,200 - 6,300 - dep expense = 5,400

dep expense = 2,900

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