Question

See if you can determine the amount of Bluebird State Bank’s current net income after taxes from the figures below (stated in millions of dollars) and the amount of its retained earnings from current income that it will be able to reinvest in the bank. (Be sure to arrange all the figures given in correct sequence to derive the bank’s Report of Income.)

Effective tax rate................. 28%
Interest on loans................. $90
Employee wages, salaries, and benefits........ 13
Interest earned on government bonds and notes.... 9
Provision for loan losses................. 5
Overhead expenses................. 3
Service charges paid by depositors.......... 3
Security gains/losses................. –7
Interest paid on federal funds purchased.......... 5
Payment of dividends of $4 per share on 1 million
outstanding shares to be made to common stockholders...... ?
Interest paid to customers holding time and savings deposits.... 40
Trust department fees.................... 3




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  • CreatedOctober 31, 2014
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