Surosa Corporation sells outdoor furniture. At the December 31, 2011, year-end, the following financial information was available from the income statement: administrative expenses, $40,400; cost of goods sold, $175,210; income taxes, $3,500; interest expense, $11,320; interest income, $1,400; net sales, $357,195; and selling expenses, $110,100. The following information was available from the balance sheet (after closing entries were made): accounts payable, $16,300; accounts receivable, $52,400; accumulated depreciation—delivery equipment, $8,550; accumulated depreciation—store fixtures, $21,110; cash, $14,200; common stock, $0.50 par value, 10,000 shares authorized, issued, and outstanding, $5,000; delivery equipment, $44,250; inventory, $68,270; investment in securities (long-term), $28,000; investment in U.S. government securities (short-term), $19,800; long-term notes payable, $50,000; paid-in capital in excess of par value, $45,000; prepaid expenses (short-term), $2,880; retained earnings, ending balance, $129,650, beginning balance, $141,585; notes payable (short-term), $25,000; prepaid expenses (short-term), $2,880; and store fixtures, $70,810.

Total assets and total stockholders’ equity at December 31, 2010, were $262,200 and $191,585, respectively, cash flows from operating activities were $20,000, and dividends for the year were $30,000.

REQUIRED

1. From the information above, prepare

(a) An income statement in single-step form,

(b) A statement of retained earnings,

(c) A classified balance sheet.

2. From the statements you have prepared, compute the following performance measures: (a) Profit margin,

(b) Asset turnover,

(c) Cash flow yield,

(d) Debt to equity ratio,

(e) Return on assets,

(f) Cash return on assets,

(g) Return on equity. (Note: Round to one decimal place.)

3. Using the industry averages for the auto and home supply industries illustrated in the graphs in the ratio boxes throughout this chapter, determine whether Surosa Corporation needs to improve its performance. Explain your answer, making recommendations as to specific areas on which Surosa Corporation should concentrate.