For December 31, 2007 the Balance Sheet of the Gardner Corporation is as follows:

Gardner Corporation
Balance Sheet
Current Assets Liabilities
Cash $15,000 Accounts Payable $20,000
Accounts Receivable $22,500 Notes Payable $30,000
Inventory $37,500 Bonds Payable $75,000
Prepaid Expenses $18,000
Fixed Assets Stockholders' Equity
Plant and Equipment (gross) $375,000 Common Stock $112,500
Less:Accumulated depreciation $75,000 Paid-in-Capital $37,500
Net Plant and Assets $300,000 Retained Earnings $118,000
Total Assets $393,000 Total Liabilities and Stockholders' Equity $393,000

Sales for the year 2008 were $330,000, with cost of goods sold being 60 percent of sales. Selling and administrative expense was $33,000. Depreciation expense was 10 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 10 percent, while interest on the bonds payable was 12 percent. These were based on December 31, 2007, balances. The tax rate average 20 percent.
Two thousand dollars in preferred stock dividends were paid and $4,100 in dividends were paid to common stockholders. There were 10,000 shares of common stock outstanding.
During the year 2008, the cash balance and prepaid expenses balance were unchanged. Accounts receivable and inventory increased by 20 percent. A new machine was purchased on December 31, 2008, at a cost of $60,000.
Accounts payable increased by 30 percent. At year-end, December 31, 2008, notes payable increased by $10,000 and bonds payable decreased by $15,000.
The common stock and paid-in capital in excess of par accounts did not change.
Required:
Prepare an income statement for the year 2008.
Prepare a statement of retained earnings for the year 2008.
Prepare a balance sheet as of December 31, 2008.