The financial statements for Castile Products, Incorporated, are given below: Castile Products, Incorporated Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $10 per value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 23,000 230,000 380,000 11,000 644,000 880,000 $ 1,524,000 $ 210,000 380,000 590,000 $ 170,000 764,000 934,000 $ 1,524,000 Sales Castile Products, Incorporated Income Statement For the Year Ended December 31 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income $ 2,240,000 1,190,000 1,050,000 650,000 400,000 45,600 354,400 106,320 $ 248,080 Account balances at the beginning of the year were: accounts receivable, $220,000; and inventory, $290,000. All sales were on account. Assets at the beginning of the year totaled $1,010,000, and the stockholders' equity totaled $695,000.