For December 31, 20x1, the balance sheet of Baxter Corporation was as follows: $ 23,00 31,eee 61,000 Current Assets Cash Accounts receivable Inventory Prepaid expenses Fixed Assets Gross plant and equipment Less: Accumulated depreciation Net plant and equipment Total assets Liabilities $ 21,000 Accounts payable 26,040 Notes payable 36,000 Bonds payable 13,100 Stockholders' Equity $ 261,000 Preferred stock 52,200 Common stock Paid in Capital $ 298,800 Retained earnings $ 384,989 Total liabilities and stockholders' equity $ 31,000 66,000 36,000 56,900 $ 304,900 Sales for 20x2 were $275,000, and the cost of goods sold was 60 percent of sales. Selling and administrative expense was $27,500. Depreciation expense was 9 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 11 percent, while the interest rate on the bonds payable was 13 percent. This interest expense is based on December 31, 20x1 balances. The tax rate averaged 20 percent. $3,100 in preferred stock dividends were paid, and $5,356 in dividends were paid to common stockholders. There were 10,000 shares of common stock outstanding. During 20x2, the cash balance and prepaid expenses balances were unchanged. Accounts receivable and inventory increased by 11 percent. A new machine was purchased on December 31, 20X2, at a cost of $46,000. Accounts payable increased by 35 percent. Notes payable increased by $7100 and bonds payable decreased by $15,500, both at the end of the year. The preferred stock, common stock, and capital paid in excess of par accounts did not change. a. Prepare an income statement for 20X2. (Round EPS answer to 2 decimal places.) Baxter Corporation 20X2 Income Statement Sales $ $ 275,000 165,000 110,000 27,500 23,490 59,010 $ Cost of goods sold Gross profit Selling and administrative expense Depreciation expense Operating profit Interest expense Earnings before taxes Taxes Earnings after taxes Preferred stock dividends Earnings available to common stockholders Shares outstanding Earnings per share $ 59,010 $ 59,010 $ 59,010 b. Prepare a statement of retained earnings for 20x2. Baxter Corporation 20x2 Statement of Retained Earnings Retained earnings balance, January 1, 20X2 Add: Earnings available to common stockholders, 20X2 Less: Cash dividend declared in 20X2 Retained earnings balance, December 31, 20X2 c. Prepare a balance sheet as of December 31, 20X2. (Amounts to be deducted should be indicated with parentheses or a minus sign.) Assets Baxter Corporation 20X2 Balance Sheet Liabilities and Stockholders' Equity Accounts payable Notes payable Bonds payable Current Assets: Cash Accounts receivable Inventory Prepaid expenses Total current assets $ 0 0 Total liabilities Stockholders' Equity Preferred stock Fixed assets: Gross plant and equipment Less: Accumulated depreciation Net plant and equipment $ Common stock Capital paid in excess of par WYTYY 0: Retained earnings Total stockholders' equity 0 Total liabilities and stockholders' equity 0 $ $ Total assets $ 0