Multistep income statement and balance sheet LO 7-1, 7-5 Use the following information to prepare a multi-step income statement and a balance sheet for Sherman Equipment Co. for Year 2. (Hint: Some of the items will not appear on either statement, and ending retained earnings must be calculated.) (Balance Sheet only: Items to be deducted must be indicated with a minus sign.) Salaries Expense $ 70,000 Operating Expenses $ 63,000 Common Stock 100,000 Cash Flow from Investing Activities 79,400 Notes Receivable (short term) 25,000 Prepaid Rent 12,600 Allowance for Doubtful Accounts 7,900 Land 41,000 Uncollectible Accounts Expense 8,200 Cash 48,200 Supplies 1,300 Inventory 98,400 Interest Revenue 5,500 Accounts Payable 47,000 Sales Revenue 324,000 Salaries Payable 13,000 Dividends 3,600 Cost of Goods Sold 149,000 Interest Receivable (short term) 1,600 Accounts Receivable 57,000 Beginning Retained Earnings 81,500

SHERMAN EQUIPMENT CO.
Income Statement
For the Year Ending December 31, Year 2
Operating Expenses
Non-Operating Items

SHERMAN EQUIPMENT CO.Balance SheetAs of December 31, Year 2AssetsTotal assetsLiabilities and Stockholders EquityCurrent LiabilitiesTotal LiabilitiesStockholders EquityTotal Stockholders EquityTotal Liabilities and Stockholders Equity