The following is the December 31, 2004 balance sheet for the Epics Corporation.
Assets			Liabilitites
Cash	$70,000		Accounts payable	$100,000
Accounts Receivable	150,000		Notes Payable	120,000
Inventory	280,000		Bonds Payable	300,000
Total Current assets	500,000		Total Liabilities	520,000
Plant and equipment	1,250,000		Equity
Less: acc. Amortization	250,000		Common Stock	500,000
Net plant and Equipment	1,000,000		Retained Earnings	480,000
			Total Equity	980,000
Total assets	$1,500,000		Total liab. & equity	$1,500,000
Sales for 2005 were $2,000,000, with the cost of goods sold being 55% of sales. Amortization expense was 10% of the gross plant and equipment at the beginning of the year. Interest expense was 9% on the notes payable and 11% on the bonds payable. Selling, general, and administrative expenses were $200,000 and the firm's tax rate is 40%.
A) Prepare an income statement.
B) If the dividend payout ratio for Epics is 35%, what is the value of the retained earnings account on December 31, 2005?