Question - During 2012, Vadercorp Ltd performed services for which customers paid or promised to pay $286,000. Of the amount, $270,000 had been collected by year end. Vadercorp paid $125,000 in cash for employee wages and owed the employees $5,000 at the end of the year for work that had been done but had not paid for. Vadercorp paid interest expense of $1,700 and $80,000 for other service expenses. The income tax rate was 25%, and income taxes had not yet been paid at the end of the year. Vadercorp declared and paid dividends of $6,000. There were no other events that affected cash.

Required:

1. Prepare an income statement for Vadercorp for the year.

2. At the start of 2012, Vadercorp reported retained earnings totaling $940,000. Prepare a statement of retained earnings.