Task:
Presented below is information related to Brokaw Corp. for the year 2010.
Net sales $1,200,000
Cost of goods sold 780,000
Selling expenses 65,000
Administrative expenses 48,000
Dividend revenue 20,000
Interest revenue 7,000
Write-off of inventory due to obsolescence 80,000
Depreciation expense omitted by accident in 2009 40,000
Casualty loss (extraordinary item) before taxes 50,000
Cash dividends declared 45,000
Retained earnings at December 31, 2009 980,000
Effective tax rate of 34% on all items
Instructions:
a.) Prepare a multiple-step income statement for 2010. Assume that 60,000 shares of common stock are outstanding.
b.) Prepare a retained earnings statement for 2010.