RuthAnn is 28 years old and is retiring at the age of 65. When she retires, she estimates that she will need an annual income of

The dividend payout ratio calculates to be 46.19%. The procedure involves applying the DuPont identity to obtain this figure. Initially, one utilizes the DuPont identity of RoE. The debt ratio is equivalently represented in another form where D/E denotes the Debt-Equity Ratio. By substituting the D/E ratio from the question into the debt ratio formula, one can derive the relationship between RoE and the earnings growth rate g via a formula, where p is the dividend payout ratio. Plugging in the necessary values yields p = 0.461988304 or 46.19%.

Answer:

Based solely on the provided information, the answers are:

a. The accounts receivable balance reported on the December 31, Year 1, balance sheet will be $4,000.

b. A net income of $18,000 will be recorded on the Year 1 income statement.

c. A net cash flow of $14,000 from operational activities will be shown on the Year 1 cash flow statement.

d. Retained earnings amounting to $18,000 will appear on the Year 1 balance sheet.

Explanation:

a.

Service revenue recorded on account for Year 1 totaled $18,000

Cash collected from accounts receivable during Year 1 amounted to $14,000

Thus, on December 31, Year 1, the accounts receivable balance stands at $18,000-$14,000 = $4,000

b. Only the $18,000 service revenue earned within Year 1 will be reported on the income statement.

c. The cash transaction recorded for the year sums to $14,000 received from customers, which is reflected in the Year 1 cash flow statement.

d. The retained earnings indicated on the Year 1 balance sheet amount to $18,000