McGrath Co. on June 30, 2011, reported a retained earnings balance of $1,475,000 before closing the books. The books of the company showed the following account balances on June 30, 2011:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,870,000
Inventory: July 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
June 30, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,000
Sales Returns and Allowances . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,542,000
Purchase Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,000
Dividends Declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Selling and General Expenses . . . . . . . . . . . . . . . . . . . . . . . . 283,000
Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,900
Instructions:
Prepare a multiple-step income statement and a retained earnings statement. McGrath Co. has 275,000 shares of common stock outstanding.