Use the following information to prepare a multi-step incomestatement and a balance sheet for Sherman Equipment Co. for Year 2.(Hint: Some of the items will not appear oneither statement, and ending retained earnings must be calculated.)(Balance Sheet only: Items to be deducted must be indicated with aminus sign.)
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| Salaries Expense | $ | 79,000 | | | Operating Expenses | $ | 72,000 | |
| Common Stock | | 100,000 | | | Cash Flow from Investing Activities | | 88,400 | |
| Notes Receivable (short term) | | 34,000 | | | Prepaid Rent | | 13,500 | |
| Allowance for Doubtful Accounts | | 8,800 | | | Land | | 50,000 | |
| Uncollectible Accounts Expense | | 9,100 | | | Cash | | 49,100 | |
| Supplies | | 2,200 | | | Inventory | | 99,300 | |
| Interest Revenue | | 6,400 | | | Accounts Payable | | 56,000 | |
| Sales Revenue | | 360,000 | | | Salaries Payable | | 22,000 | |
| Dividends | | 4,500 | | | Cost of Goods Sold | | 158,000 | |
| Interest Receivable (short term) | | 2,500 | | | Accounts Receivable | | 66,000 | |
| Beginning Retained Earnings | | 86,000 | | | | | | |
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| | SHERMAN EQUIPMENT CO. | | Income Statement | | For the Year Ending December 31, Year2 | | | | | | | | | 0 | | Operating Expenses | | | | | | | | | | | | | | | | Total Operating Expenses | | 0 | | | 0 | | Non-Operating Items | | | | | | | | | | | $0 |
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| | SHERMAN EQUIPMENT CO. | | Balance Sheet | | As of December 31, Year 2 | | Assets | | | | | | | | | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | $0 | | Liabilities and Stockholders’Equity | | Current Liabilities | | | | | | | | | | | | | | | | | Total Liabilities | | | $0 | | Stockholders’ Equity | | | | | | | | | | | | | | | | | Total Stockholders’ Equity | | | 0 | | Total Liabilities andStockholders’ Equity | | | $0 |
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