Income Statement and Statement of Retained Earnings

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Benford Company uses a periodic inventory system and presents the following items derived from its December 31, 2016, adjusted trial balance:

Operating Expenses


Dividend Revenue


Retained Earnings, January 1, 2016


Sales (net)


Common Stock, $15 par


Merchandise Inventory, January 1, 2016


Purchases (net)


The following information is also available for 2016 and is not reflected in the preceding accounts:

  1. The common stock has been outstanding for the entire year. A cash dividend of $0.92 per share was declared.
  2. The income tax rate on all items of income is 30%.
  3. The ending merchandise inventory is $30,030.
  4. A pretax $4,400 loss was recognized on the sale of Division E (a component of the company). This division had earned a pretax operating income of $2,090 during 2016.
  5. Damaged inventory was written off at a pretax loss of $7,260.
  6. An earthquake, which is unusual in the area, caused a $4,070 pretax loss.


  1. Prepare a 2016 single-step income statement for Benford Company.
  2. Prepare a 2016 retained earnings statement for Benford Company.

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