Note: You must complete part 1 before part 2.

After all of the transactions for the year ended December 31, 20Y2, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follows were taken from the records of Equinox Products Inc.

Income statement data:
Advertising expense	$150,000
Cost of merchandise sold	3,700,000
Delivery expense	30,000
Depreciation expenseoffice buildings and equipment	30,000
Depreciation expensestore buildings and equipment	100,000
Dividend revenue	4,500
Gain on sale of investment	4,980
Income from Pinkberry Co. investment	76,800
Income tax expense	140,500
Interest expense	21,000
Interest revenue	2,720
Miscellaneous administrative expense	7,500
Miscellaneous selling expense	14,000
Office rent expense	50,000
Office salaries expense	170,000
Office supplies expense	10,000
Sales	5,254,000
Sales commissions	185,000
Sales salaries expense	385,000
Store supplies expense	21,000
Retained earnings and balance sheet data:
Accounts payable	$194,300
Accounts receivable	545,000
Accumulated depreciationoffice buildings and equipment	1,580,000
Accumulated depreciationstore buildings and equipment	4,126,000
Allowance for doubtful accounts	8,450
Available-for-sale investments (at cost)	260,130
Bonds payable, 5%, due 20Y4	500,000
Cash	246,000
Common stock, $20 par (400,000 shares authorized; 100,000 shares issued, 94,600 outstanding)	2,000,000
Dividends:
Cash dividends for common stock	155,120
Cash dividends for preferred stock	100,000
Goodwill	500,000
Income tax payable	44,000
Interest receivable	1,125
Investment in Pinkberry Co. stock (equity method)	1,009,300
Investment in Dream Inc. bonds (long term)	90,000
Merchandise inventory (December 31, 20Y2), at lower of cost (FIFO) or market	778,000
Office buildings and equipment	4,320,000
Paid-in capital from sale of treasury stock	13,000
Excess of issue price over parcommon stock	886,800
Excess of issue price over parpreferred stock	150,000
Preferred 5% stock, $80 par (30,000 shares authorized; 20,000 shares issued)	1,600,000
Premium on bonds payable	19,000
Prepaid expenses	27,400
Retained earnings, January 1, 20Y2	9,319,725
Store buildings and equipment	12,560,000
Treasury stock (5,400 shares of common stock at cost of $33 per share)	178,200
Unrealized gain (loss) on available-for-sale investments	(6,500)
Valuation allowance for available-for-sale investments	(6,500)

On your own paper, in the working papers, or using a spreadsheet, prepare the following:

a. Prepare a multiple-step income statement for the year ended December 31, 20Y2, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below.

b. Prepare a retained earnings statement for the year ended December 31, 20Y2. Save your calculations and enter the requested amounts below.

c. Prepare a balance sheet in report form as of December 31, 20Y2. Save your calculations and enter the requested amounts below.

If required, only use the minus sign to indicate loss before income tax, net loss, or a deficit balance in retained earnings.

Gross profit	$fill in the blank 1
Total selling expenses	$fill in the blank 2
Total administrative expenses	$fill in the blank 3
Total operating expenses	$fill in the blank 4
Income from operations	$fill in the blank 5
Net other expenses and income	$fill in the blank 6
Income tax	$fill in the blank 7
Net income	$fill in the blank 8
Earnings per common share (rounded to the nearest cent)	$fill in the blank 9
Retained earnings, January 1, 20Y2	$fill in the blank 10
Total current assets	$fill in the blank 11
Investment in Dream Inc. bonds	$fill in the blank 12
Total property, plant, and equipment	$fill in the blank 13
Total assets	$fill in the blank 14
Total current liabilities	$fill in the blank 15
Net long-term liabilities	$fill in the blank 16
Total liabilities	$fill in the blank 17
Total paid-in capital preferred 5% stock	$fill in the blank 18
Total paid-in capital common stock, $20 par	$fill in the blank 19
Total paid-in capital	$fill in the blank 20
Retained earnings, December 31, 20Y2	$fill in the blank 21
Total stockholders' equity	$fill in the blank 22