Q1: (Multi-step Income Statement & Statement of Retained Earnings) Presented below is information related to Walt Disney Company for 2004. Retained earnings balance, January 1, 2004 $ 850,000 Sales for the year 39,000,000 Cost of goods sold 19,000,000 Depreciation Expense mistakenly not reported in 2002 32,000 Telephone Expenses - Sales 27,000 Advances from customers 117,000 Interest revenue 70,000 Rental revenue 50,000 Write-off of inventory due to obsolescence 80,000 Accumulated depreciation Equipment 40,000 Accumulated depreciation Building 28,000 Write-off of goodwill (Infrequent or Unusual Item) 820,000 Sales Discounts 15,000 Sales Return 25,000 Overstatement of income due change in inventory costing method 88,000 Prepaid insurance 20,000 Income taxes for 2004 905,000 Travel and entertainment Expenses 69,000 Advertising Expenses 54,000 Transportation-out Expenses 93,000 Sales commissions 83,000 Gain on the sale of short term securities 110,000 Loss due to flood damageextraordinary item 390,000 Loss on the disposition of the wholesale division 440,000 Loss on operations of the wholesale division 90,000 Dividends declared and paid on common stock 250,000 Dividends declared and paid on preferred stock 70,000

Prepare a multi-step income statement. American Horse Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, American Horse sold the wholesale operations to Rogers Company. During 2004, there were 300,000 shares of common stock outstanding all year.