At December 31, 2011 an analysis of the accounts of Cherry Co. Ltd. revealed the following information
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following information:
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Land
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$740„000
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Patents
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200,000
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Retained earnings, January 1, 2011
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580,000
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interest expense
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34,000
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General and administrative expenses
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300,000
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Dividends declared
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58.000
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Allowance for doubtful accounts
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10.000
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Notes payable (maturity 7/1114)
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100,000
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Machinery and equipment
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900,000
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Materials and supplies
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80,000
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Accounts payable
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120,000
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Sales
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2,200„000
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Purchase discounts
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36.000
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Purchases
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1,284,000
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Loss on discontinued operations (net of tax)
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84,000
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Selling expenses
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256,000
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Cash
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120,000
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Accounts receivable
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180,000
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Share capital
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400,000
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Accumulated depreciation
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360,000
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Dividend revenue
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16,000
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Inventory, January 1, 2011
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304 000
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Inventory, December 31, 2011
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250,000
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Unearned service revenue
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8,800
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Accrued interest payable
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2,000
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The amount of income taxes applicable lo ordinary income was $97,200., excluding the tax effect of the discontinued operations loss which amounted to $36,000, Cherry's capital structure consists of 50,000 ordinary shares.
Instructions
(a) Prepare an income statement in proper format in 2011.
(b) Prepare a retained earnings statement in proper format in 2011.