1	XYZs beginning balance in retained earnings was $1,940,000. The beginning balance in plant, property, and equipment (PP&E) was $14,500,000. The beginning balance in accumulated depreciation was $4,750,000.
2	On January 1, 2018, XYZ announced it was discontinuing all operations east of the Mississippi River. The assets associated with the discontinued operations had a combined cost of $4,500,000 and associated accumulated depreciation of $2,250,000.
3	Before the discontinued assets were sold for $3,000,000 on July 1, XYZ lost $900,000 on operations east of the Mississippi.
4	Revenue on continuing operations, west of the Mississippi, was $9,000,000 for 2018. Cost of goods sold was $5,000,000. Operating expenses other than deprecation was $2,750,000.
5	Depreciation on the west of the Mississippi assets was calculated on an expected life of 16 years. As of 1/1/2018, these assets were 4 years old on average. Unfortunately, the previous accountant forgot to include $2,000,000 in expected salvage value for these calculations.
6	XYZ has also determined that the original expected salvage value is still reasonable, but that the total expected life of the assets should have been 20 years, i.e., these assets are expected to last another 16 years.
7	XYZ earned $360,000 in rental income and incurred $480,000 in interest expense for the year.
8	XYZ had 1,000,000 shares of common stock and 500,000 shares of preferred stock outstanding for 2018. XYX declared and paid dividends of $0.40 per share on the common stock and $0.60 per share on the preferred stock.
9	XYZs tax rate was 30%.
10	Prepare XYZs statement of retained earnings and multi-step income statement for 2018 in good form.