The comparative balance sheets and an income statement for Franklin Corporation follow. Assets Balance Sheets As of December 31 Year 2 Year 1 $ 70,958 32,005 $ 38,480 23,470 155,992 2,300 171,590 4,600 252,950 287,530 Cash Accounts receivable Merchandise inventory Prepaid rent Equipment Accumulated depreciation Land Total assets Liabilities Accounts payable (inventory) Salaries payable Stockholders' equity Common stock, $50 par value Retained earnings (141,200) 196,100 $569,105 (231,730) 84,800 $ 378,740 $ 70,474 79,940 26,402 22,630 247,500 224,729 200,500 75,670 Total liabilities and equity $569,105 $ 378,740 Income Statement For the Year Ended December 31, Year 2 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Rent expense Salaries expense Other operating expenses Net income $1,500,000 (797,201) 782,799 (23,250) (20,990) (253,790) (255,710) $ 149,059 Other Information 1. Purchased land for $111,300. 2. Purchased new equipment for $98,100. 3. Sold old equipment that cost $132,680 with accumulated depreciation of $113,780 for $18,900 cash. 4. Issued common stock for $47,000.