The following list, in alphabetical order, shows the various items that regularly appear on the financial statements of Sterns Audio Book Rental Corp. The amounts shown for balance sheet items are balances as of December 31, 2010 (with the exception of retained earnings, which is the balance on January 1, 2010), and the amounts shown for income statement items are balances for the year ended December 31, 2010.

Required
1. Prepare an income statement for the year ended December 31, 2010.
2. Prepare a statement of retained earnings for the year ended December 31, 2010.
3. Prepare a balance sheet at December 31, 2010.
4. You have $1,000 to invest. On the basis of the statements you prepared, would you use it to buy stock in this company? Explain. What other information would you want beforedeciding?

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Accounts payable Accounts receivable Advertising expense Capital stock Cash Display fixtures Dividends paid during the year S 4,500 300 14,500 50,000 Notes payable Rental revenue Rent paid on building Retained earnings S 10,000 125,900 60,000 35,390 17900 70,000 3,600 2,490 Salaries and wages expense 45,000 12,000 Supplies inventory Water, gas, and electricity