The following is a partial list of the account balances, after adjustments, of the Silvoso Company on December 31, 2007:

The following information is also available:
1. The company declared and paid a $0.60 per share cash dividend on its common stock. The stock was outstanding the entire year.
2. A physical count determined that the December 31, 2007 ending inventory is $34,100.
3. A tornado destroyed a warehouse, resulting in a pretax loss of $12,000. The last tornado in this area had occurred 20 years earlier.
4. While making its December 31, 2007 adjusting entries, the company determined that:
a. In 2006, it had inadvertently omitted $11,000 depreciation expense on its buildings and office equipment. The error did not have any effect upon the depreciation recorded in 2007.
b. Because of recently increased obsolescence, its sales equipment should be depreciated over a shorter useful life. The resulting $2,500 of additional depreciation has been included in the 2007 depreciation expense.
5. On May 1, 2007, the company sold an unprofitable division (R). From January through April, Division R (a component of the company) had incurred a pretax operating loss of $8,700. Division R was sold at a pretax gain of $10,000.
6. The company is subject to a 30% income tax rate. Its income tax expense for 2007 totals $930. The breakdown is as follows:
Income Tax Expense (Credit) Related to Amount
Continuing income .............$ 7,440
Operating loss of Division R .......... (2,610)
Gain on sale of Division R ............. 3,000
Loss from tornado ............ (3,600)
Error in recording 2006 depreciation expense . (3,300)
$ 930
7. The company had average stockholders' equity of $150,000 during 2007.

Required
1. As supporting documents for Requirement 2, prepare separate supporting schedules for cost of goods sold, selling expenses, general and administrative expenses, and depreciation expense.
2. Prepare a 2007 multiple-step income statement for the Silvoso Company. Include any related note to the financial statements.
3. Prepare a 2007 retained earnings statement.
4. What was Silvoso Company's return on stockholders' equity for 2007? What is your evaluation of Silvoso Company's return on stockholders' equity if last year it was10%?

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Depreciation expense: buildings and S 1,400 80,000 5,000 8,500 340,700 6,900 32,000 17,000 12, 100 4, 100 9,600 3,700 Office supplies expense office equipment Sales commissions and salaries Inventory, January 1, 2007 Sales supplies used Retained earnings, January 1, 2007 Purchases returns and allowances Bad debts expense Transportation-in Sales discounts take Purchases Delivery expense 14,500 Common stock, $10 par 37,800 83,700 18,200 Loss on sale of office equipment (pretax) Insurance and property tax expense 5,600 Sales 6,200 2,700 13,500 4,900 Rent revenue Office and administrative salaries expense Promotion and advertising expense Sales returns and allowances Purchases discounts taken Depreciation expense: sales equipment Interest expense 173,000 7,700