Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 2012 Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2012 and 2041 2012 2011 Retained earnings, January 1 $3,704,000 $3,264,000 Net income $ 600,000 $ 550,000 Dividends On preferred stock (10,000) (10,000) On common stock (100,000) (100,000) Increase in retained earnings $ 490,000 $440,000 Retained earnings, December 31 54,194,000 $3,704,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 2012 and 2041 2012 2011 Sales 5 10,850,000 $10,000,000 Cost of goods sold (6,000,000) (5,450,000) Gross profit $ 4,850,000 $ 4,550,000 Selling expenses 3 (2,170,000) $ (2,000,000) Administrative expenses (1,627.500) (1,500,000) Marshall Inc. Comparative Income Statement For the Years Ended December 31, 2012 and 20Y1 2012 20Y1 Sales $ 10,850,000 $10,000,000 Cost of goods sold (6,000,000) (5,450,000) Gross profit $4,850,000 $4,550,000 Selling expenses $(2,170,000) $ (2,000,000) Administrative expenses (1,627,500) (1,500,000) Total operating expenses $(3,797,500) $ (3,500,000) Operating income $ 1,052,500 $ 1,050,000 Other revenue and expense: Other revenue 99,500 20,000 Other expense interest) (132,000) (120,000) Income before income tax expense $1,020,000 $ 950,000 Income tax expense (420,000) (400,000) Net income $ 600,000 $ 550,000