The following is a pre-closing trial balance for Axo Inc., a manufacturer of metal tubing, as at December 31, 2016:

During the year, the company declared and paid dividends of $300,000, and issued shares for proceeds of $200,000.

Required:
Prepare, in good form, the following:

a. A multi-step income statement that includes relevant subtotals, with operating expenses listed by their nature, for the year ended December 31, 2016.
b. A statement of changes in equity for the year ended December 31, 2016.

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Debit Credit $ 525,000 Accounts payable $ 1,360,000 Accounts receivable Accumulated depreciation 6,555,000 Cash 69,300 Common shares 700,000 Depreciation 1,475,000 Income from discontinued operations 25,000 Income tax expense 154,200 Income tax on income from discontinued operations 7,500 Interest expense 355,000 Inventories 645,000 Long-term debt 5,400,000 Plant and equipment 12,300,000 Raw materials used 1,670,000 Retained earnings 817,000 Salaries and wages 5,210,000 Sales 9,224,000 $23,246,000 $23,246,000 Total