Problem #2 The comparative balance sheets of Gannon Corporation for December 31, 2020 and 2019 and its 2020 income statement are as follows: Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation--Equipment Total assets Liabilities and Equity Accounts payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 2020 $123.450 77,100 240.600 15.100 456.250 262,250 (110,750) $607,750 $ 17,750 17.750 115,000 132,750 215,000 30,000 230.000 $607,750 2019 $ 61,550 80.750 250,700 17,000 410.000 200,000 (95,000) $515,000 $102.000 102,000 87.500 189,500 200,000 0 125,500 $515,000 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Total operating expenses Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $1,185,000 595,000 590,000 $ 38,600 362.850 401.450 188,550 (2,100) 186,450 28.350 158.100