Porter Corporation's capital structure consists of 50,000 shares of common stock. At December 31. 2010 an analysis of the accounts and discussions with company officials revealed the following information:
|
Sales
|
$1,100,000
|
|
Purchase discounts
|
18,000
|
|
Purchases
|
642,000
|
|
Earthquake loss (net of tax) (extraordinary item)
|
42,000
|
|
Selling expenses
|
128,000
|
|
Cash
|
60,000
|
|
Accounts receivable
|
90,000
|
|
Common stock
|
200,000
|
|
Accumulated depreciation
|
180,000
|
|
'Dividend revenue
|
8,000
|
|
Inventory, January 1, 2010
|
152,000
|
|
Inventory, December 31, 2010
|
125,000
|
|
Unearned service revenue
|
4,400
|
|
Accrued interest payable
|
1,000
|
|
1.aml
|
370,000
|
|
Patents
|
100,000
|
|
Retained earnings, January 1, 2010
|
290,000
|
|
Interest expense
|
17,000
|
|
General and administrative expenses
|
150,000
|
|
Dividends declared
|
29,000
|
|
Allowance for doubtful accounts
|
5,000
|
|
Notes payable (maturity 7/1113)
|
200,000
|
|
Machinery and equipment
|
450,000
|
|
/Materials and supplies
|
40,000
|
|
Accounts payable
|
60,000
|
The amount of income taxes applicable to ordinary income was $48,600, excluding the tax effect of the earthquake loss which amounted to $18,000.
Instructions
(a) Prepare a multiplc-step income statement.
(b) Prepare a retained earnings statement.