=+The income statement for the year ended December 31, 2011, is as follows:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,504,000 Cost of merchandise sold . . . . . . . . . . . . . . . . . 784,000 __________ Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 720,000 Operating expenses:

Depreciation expense . . . . . . . . . . . . . . . . . . $ 37,700 Other operating expenses . . . . . . . . . . . . . . . 448,280 _________ Total operating expenses . . . . . . . . . . . . . . 485,980 __________ Operating income . . . . . . . . . . . . . . . . . . . . . . . $ 234,020 Other income:

Gain on sale of investments . . . . . . . . . . . . 52,000 __________ Income before income tax . . . . . . . . . . . . . . . . $ 286,020 Income tax expense . . . . . . . . . . . . . . . . . . . . . 99,700 __________ Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 186,320 __________ __________ The following additional information was taken from the records: