For December 31, 20X1, the balance sheet of Baxter Corporation was as follows:

Current Assets			Liabilities
Cash	$	18,000	Accounts payable	$	20,000
Accounts receivable		23,000	Notes payable		28,000
Inventory		33,000	Bonds payable		58,000
Prepaid expenses		12,800
Fixed Assets			Stockholders Equity
Gross plant and equipment	$	258,000	Preferred stock	$	28,000
Less: Accumulated depreciation		(51,600)	Common stock		63,000
			Paid in Capital		33,000
Net plant and equipment	$	206,400	Retained earnings		63,200
Total assets	$	293,200	Total liabilities and stockholders equity	$	293,200

Sales for 20X2 were $260,000, and the cost of goods sold was 55 percent of sales. Selling and administrative expense was $26,000. Depreciation expense was 11 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 9 percent, while the interest rate on the bonds payable was 15 percent. This interest expense is based on December 31, 20X1 balances. The tax rate averaged 35 percent. $2,800 in preferred stock dividends were paid, and $8,750 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 9 percent. A new machine was purchased on December 31, 20X2, at a cost of $43,000. Accounts payable increased by 25 percent. Notes payable increased by $6,800 and bonds payable decreased by $14,000, 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.)

b. Prepare a statement of retained earnings for 20X2.

c. Prepare a balance sheet as of December 31, 20X2. (Amounts to be deducted should be indicated with parentheses or a minus sign.)