The following data were taken from the records of Disk N’ Dat Corporation for the year ended August 31, 2008.
Income statement data:
Administrative expenses .................... $ 23,000
Cost of merchandise sold ................... 232,000
Gain on condemnation of land ................. 75,000
Income tax:
Applicable to continuing operations ............... 70,200
Applicable to loss from discontinued operation ............ 14,400
Applicable to gain on condemnation of land ............ 30,000
Interest expense ....................... 3,000
Interest revenue ....................... 2,500
Loss from disposal of discontinued operation ............ 36,000
Loss from fixed asset impairment ................ 14,000
Restructuring charge ...................... 45,000
Sales ............................ 550,000
Selling expenses ........................ 60,000
Retained earnings and balance sheet data:
Accounts payable ...................... $ 12,000
Accounts receivable ..................... 28,000
Accumulated depreciation ................... 145,000
Accumulated other comprehensive income .............. $ 9,000
Allowance for doubtful accounts ................. 2,500
Cash ........................... 87,500
Common stock, $1 par (100,000 shares authorized;
46,000 shares issued) ..................... 46,000
Deferred income taxes payable (current portion, $4,700) ....... 12,800
Dividends:
Cash dividends for common stock ................ 21,000
Cash dividends for preferred stock ............... 9,000
Stock dividends for common stock ............... 5,000
Dividends payable ....................... 7,500
Employee termination obligation (current) ............ 30,000
Equipment .......................... 1,350,000
Income tax payable ..................... 21,450
Interest receivable ....................... 500
Merchandise inventory (August 31, 2008), at lower
of cost (FIFO) or market ................... 87,000
Paid-in capital from sale of treasury stock ............ 5,000
Paid-in capital in excess of par—common stock ........... 820,000
Paid-in capital in excess of par—preferred stock .......... 20,000
Patents ........................... 40,000
Preferred 6% stock, $100 par (30,000 shares authorized;
1,500 shares issued) ...................... 150,000
Prepaid expenses ...................... 15,900
Retained earnings, September 1, 2007 ............... 397,950
Temporary investments in marketable equity securities (at cost) .... 125,000
Treasury stock (1,000 shares of common stock at
cost of $30 per share) .................... 30,000
Unrealized gain on marketable equity securities ........... 9,000

Instructions
1. Prepare a multiple-step income statement for the year ended August 31, 2008, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 45,000 and preferred dividends were $9,000. Assume that the gain on the condemnation of land is an extraordinary item.
2. Prepare a retained earnings statement for the year ended August 31, 2008.
3. Prepare a balance sheet in report form as of August 31, 2008.