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Consider Brighton’s results for Year 0 (see excel click here). The sales forecast for Year 1 is given in excel. In addition, Brighton plans on paying dividends of $20,000 in Year 1, they have 40,000 shares of common stock outstanding and for simplification, assume their tax expense is 35% of EBT. For Year 1, forecast Brighton’s:

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Answer:

EPS is $5.36 per share

Retained Earning is $1,294,500

Explanation:

Financial Statement section of this question is missing which is attached with this answer. This answer is made according to attached data, Please find that.

Number of Shares = 40,000

Earning Per share = Net Income / Number of Shares

Earning Per share = 214,500 / 40,000 = $5.36 per share

Retained Earning = 1,100,000.00 + 214,500.00 - 20,000.00 = 1,294,500

                           Income Statement

Year                                            0                           1

Sales                          1,000,000.00 1,200,000.00

Variable Expenses         (600,000.00)          (720,000.00)

Contribution Margin 400,000.00           480,000.00

Fixed Expenses         (150,000.00)          (150,000.00)  

Operating Income         250,000.00           330,000.00

Nonrecurring Gain           75,000.00          

Tax Expense                 (113,750.00)            (115,500.00)

Net Income                  211,250.00               214,500.00

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