Calculating Retained Earnings from Pro Farina Income Consider the following income statement for the Heir Jordan Corporation: A 20 percent growth rate in sales is projected. Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant. What is the projected addition to retained earnings?

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HEIR JORDAN CORPORATION income Statement Sales $32,000 Costs 12,900 $19,100 Taxable income Taxes (34%) 6,494 $12,606 Net income Dividends $4,800 Addition to retained earnings 7,806