Presented below is selected information related to the Gator Company for 2017:
Retained earnings beginning balance, unadjusted, January 1, 2017 $575,000
Sales $4,000,000
Merchandise inventory, LIFO $375,000
Accounts Receivable, net of the allowance for doubtful accounts $450,000
Selling and administrative expenses $400,000
Net loss (pre-tax) from discontinued operations $(100,000)
Cash dividends declared but not paid on common stock $50,000
Cost of goods sold $950,000
Unrecorded expense from 2016, not noticed until 2017 (net-of-tax) $55,000
Unrealized holding gain on available-for-sale securities (after-tax) $90,000
Accounts Payable $120,000
Other revenue $80,000
Other expenses $80,000
Sales Allowances $95,000
Assume a 40% tax rate on all items and that 20,000 shares of common stock were outstanding during the year. The available-for-sale securities were purchased in 2017 and none were sold during 2017. All accounts have their normal debit or credit balance.
Required
(A) Prepare a multi-step income statement for the year 2017. Do not prepare a statement of comprehensive income. Be sure to show and label all of your work in a neat and proper format.
(B) Prepare a statement of retained earnings for the year 2017. Be sure to show and label all of your work in a neat and proper format.