Chapter 5, Question 8 Ortega's Pizza Condensed Income Statement and Statement of Retained Earnings For the Period: January 1 through December 31, This Year INCOME STATEMENT SALES $700,000 Cost of Sales 210,000 GROSS PROFIT 490,000 Operating Expenses (excluding depreciation) 388,000 Depreciation 14,000 OPERATING INCOME 88,000 Interest 30, 000 INOME BEFORE INCOME TAXES 58,000 Income Taxes (40%) 23,000 NET INCOME 35,000 STATEMENT OF RETAINED EARNINGS Retained Earnings, December 31, Last Year Net Income for This Year Subtotal Cash Dividends Paid This Year Retained Earnings, December 31, This Year I 50,000 35,000 85,000 20,000 $65,000