Lurch Company’s December 31, 2018, balance sheet follows:

During 2019, the following transactions occurred:
1. To avoid paying monthly rent of $5,000 on existing plant facilities, the company decided to buy a tract of land and construct a building of its own on it. On January 2, 2019, Lurch exchanged 6,000 shares of its common stock to acquire the land; the stock was selling for $25 per share. Construction of the building also began on January 2, 2019. At the time, Lurch borrowed funds by issuing a 1-year, $500,000 note at 12% to help finance the project. The principal and interest on the note are due January 3, 2020. Construction costs (paid in cash) that occurred evenly throughout the year totaled $700,000. The building was completed on December 30, 2019, and the move-in to the new building was to occur during the next week.
2. On January 2, 2019, Lurch exchanged its one existing machine plus $50,000 for a newer machine with a fair value of $430,000. The new machine is to be depreciated using straight-line depreciation based on an economic life of 5 years and a residual value of $55,000.
3. Lurch uses a FIFO perpetual inventory system. Lurch sold $350,000 of its inventory for $700,000 cash, paid for its beginning accounts payable, and purchased $480,000 of inventory on account during the year.
4. On July 31, 2019, Lurch declared and paid a $2.50 per share cash dividend to its shareholders.
5. Lurch is subject to a 21% income tax rate, and income taxes are accrued at year-end.

Required:
Prepare Lurch’s income statement and statement of retained earnings for the fiscal year ended December 31, 2019, and a balance sheet as of December 31, 2019. Show all supporting journal entries and computations made during 2019.

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Assets $ 540,000 450,000 60,000 Cash Inventory Prepaid rent Machine Less: Accumulated depreciation $ 500,000 (135,000) 365,000 $1,415,000 Liabilities and Equities $ 400,000 300,000 515,000 200,000 $1,415,000 Accounts payable Common stock, $10 par Additional paid-in capital Retained earnings