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Sales for 2013 were $310,000, and the cost of goods sold was 55 percent of sales. Selling and administrative expense was $31,000. Depreciation expense was

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Sales for 2013 were $310,000, and the cost of goods sold was 55 percent of sales. Selling and administrative expense was $31,000. Depreciation expense was 11 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 9 percent, while the interest rate on the bonds payable was 15 percent. This interest expense is based on December 31, 2012 balances. The tax rate averaged 35 percent. $3,000 in preferred stock dividends were paid and $6,150 in dividends were paid to common stockholders. There were 10,000 shares of common stock outstanding. During 2013, the cash balance and prepaid expenses balances were unchanged. Accounts receivable and inventory increased by 9 percent. A new machine was purchased on December 31, 2013, at a cost of $53,000. Accounts payable increased by 30 percent. Notes payable increased by $7,800 and bonds payable decreased by $19,000, both at the end of the year. The preferred stock, common stock, and capital paid in excess of par accounts did not change. a. Prepare an income statement for 2013. (Round EPS answer to 2 decimal places. Input all amounts as positive values.) b. Prepare a statement of retained earnings for 2013. (Input all amounts as positive values.)

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