Presented below are the financial statements of Sarasota Company Sarasota Company Comparative Balance Sheets December 31 Assets Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total 2017 2016 S113,750 65,000 65,000 45,500 91,000 65,000 195,000 253,500 (104,000) (78,000) $360,750 $351,000 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total S61,750 48,750 22,750 26.000 55,250 107,250 8,500 45.00 162,500 123,500 $360,750 $351,000 Sarasota Company Income Statement For the Year Ended December 31,2017 Sales revenue Cost of goods sold Gross profit Selling expenses Administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net income 786,500 568,750 217,750 $58,500 19.500 78,000 139,750 9,750 130,000 26,000 104.000 Additional data: 1. 2. 3. Depreciation expense was $ 56,875. Dividends declared and paid were $ 65,000. During the year equipment was sold for $ 27,625 cash. This equipment cost $58,500 originally and had accumulated depreciation of $ 30,875 at the time of sale. Further analysis reveals the following. 1. 2. 3. 4. Accounts payable pertain to merchandise suppliers. All operating expenses except for depreciation were paid in cash. All depreciation expense is in the selling expense category. All sales and purchases are on ac count