The following are selected account balances from Eastern Shore Ltd€™s trial balance on December 31, 2016:

Required:
a. Prepare Eastern Shore€™s statement of income and comprehensive income and statement of changes in shareholders€™ equity in good form for the year ended December 31, 2016. Assume there have been no share issues or redemptions during 2016. (Hint: At what date is the retained earnings balance of $3,892,750 measured? How can you tell?)
b. Prepare the shareholders€™ equity section of the statement of financial position as at December 31, 2016.
c. Based on this information, does it appear likely that Eastern Shore will be able to continue paying common and preferred dividends at similar levels in the future? Explain.
d. Why might viewing Eastern Shore€™s statements of income for the previous few years help you in answering part €œc€? What other information would you find helpful in reaching a conclusion?
e. Considering both common and preferred shares, what was Eastern Shore€™s dividend payout ratio in 2016?

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Debits Credits Accumulated other comprehensive income $17,250 S21,390,000 Liabilities 6,712,500 105,000 Dividends declared common shares Common shares Cost of goods sold Interest expense Operating expenses Other comprehensive income Dividends declared preferred shares Preferred shares Retained earnings Sales revenue Wages expense 225,000 6,885,000 1,020,000 90,000 300,000 5,000 69,000 3,750,000 3,892,750 2,326,500 390,000 $23,589,000 $23,589,000