The comparative balance sheets and an income statement for Vernon Corporation follow: Assets Balance Sheets As of December 31 Year 2 Year 1 $ 57,803 27,546 39,650 20,200 157,802 173,580 2,270 4,540 258,890 286,450 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 Total liabilities and equity (144,180) 192,650 $ 552,781 $ 61,913 (233,680) 78,850 $ 369,590 26,203 70,230 22,460 247,000 217,665 $ 552,781 199,000 77,900 $ 369,590 Income Statement Sales Cost of goods sold Depreciation expense Rent expense For the Year Ended December 31, Year 2 Gross profit Operating expenses $1,503,000 (798,795) 704,205 (20,460) (28,840) Salaries expense (256,530) Other operating expenses (258,610) Net income $ 139,765