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.