selected account balances of connell company for 2011 along with 250893

Selected account balances of Connell Company for 2011 along with additional information as of December 31 are as follows:

Bad Debt Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,000

Delivery Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,000

Depreciation Expense—Delivery Trucks . . . . . . . . . . . . . . . . . . . . . . . . 29,000

Depreciation Expense—Office Building . . . . . . . . . . . . . . . . . . . . . . . . 25,000

Depreciation Expense—Office Equipment . . . . . . . . . . . . . . . . . . . . . . 10,000

Depreciation Expense—Store Equipment . . . . . . . . . . . . . . . . . . . . . . . 25,000

Dividend Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000

Employee Pension Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000

Freight-In . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,000

Gain on Sale of Office Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000

Income Taxes, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427,425

Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000

Inventory, January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775,000

Loss on Sale of Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Loss on Write-Down of Obsolete Inventory . . . . . . . . . . . . . . . . . . . . . 75,000

Miscellaneous General Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000

Miscellaneous Selling Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000

Officers’ and Office Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550,000

Property Taxes Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000

Purchase Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,700

Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,633,200

Retained Earnings, January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . 550,000

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,125,000

Sales Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000

Sales Returns and Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000

Sales Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521,000

(a) Inventory was valued at year-end as follows:

Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $825,000

Write-down of obsolete inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000

$750,000

(b) Number of Connell shares of stock outstanding: 60,000

Instructions:

Prepare a multiple-step income statement and statement of retained earnings for the year ended December 31, 2011.

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