The Schultz Company prepares interim financial statements at the end of each quarter. The income statement presented at the end of the first quarter of 2007 is as follows:

Shown next is the Schultz Company trial balance as of June 30, 2007:

Additional information:
1. The company uses a perpetual inventory system.
2. The company uses control accounts for selling and administrative expenses.
3. The company journalizes and posts its adjusting entries to its accounts only at year-end.
4. Uncollectible accounts average 0.5% of net sales.
5. The $4,000 note receivable was received on March 1, 2007. The 6-month note carries an annual interest rate of 12%, the interest to be collected at the maturity date.
6. The balance in the Prepaid Insurance account represents payment made on January 1, 2007 for a one-year comprehensive insurance policy.
7. The Property and Equipment account consists of land, $5,000; buildings, $55,000; and equipment, $20,000. The buildings are being depreciated over a 25-year life; the equipment over an 8-year life. Straight-line depreciation is used; residual value is disregarded. No acquisitions have been made in 2007. The depreciation on the buildings is treated as an administrative expense; depreciation on the equipment as a selling expense.
8. On February 1, 2007, the company rented some floor space to another company, receiving one year's rent of $1,800 in advance.
9. The bonds pay interest semiannually on January 1 and July 1. Straight-line amortization of the discount is recorded at the end of each year.
10. The company estimates that its pretax income for the second half of 2007 will total $11,550. All items in income are subject to the same income tax rate schedule. The income tax rate schedule is 15% on the first $20,000 of taxable income and 30% on the excess. There is no difference between the company's pretax financial income and taxable income, and no tax credits are available. The company rounds its estimated effective income tax rate to the nearest tenth of a percent. Income taxes will be paid during the first quarter of 2008.
11. On June 29, 2007, the company had declared and recorded (directly in Retained Earnings) a semiannual dividend of 40C per share, payable on August 3, 2007.
12. The 8,000 shares of common stock have been outstanding the entire 6 months of 2007.

Required
1. Prepare a 10-column worksheet to develop the Schultz Company financial statements for the first 6 months of 2007 (refer to Chapter 3 for a worksheet illustration, if necessary).
2. Prepare the income statement for
(a) The first 6 months of 2007 and
(b) The second quarter of 2007.
3. Prepare a retained earnings statement for the first 6 months of 2007.
4. Prepare the June 30, 2007 balancesheet.

Sales (net) Cost of goods sold Gross profit Operating expenses: $40,000 23,000) $17,000 Selling expenses Administrative expenses Total operating expenses $8,800 4,210 (13,010) 3,990 Pretax operating income Other items: $ 40 300 Interest revenue Rent revenue Interest expense Income before income taxes Income tax expense Net income 33010 S 4,000 (700) $ 3,300 Earnings per share (8,000 shares) $.41 Debit 7,200 10,300 4,000 24,400 Credit Cash Accounts receivable (net) Note receivable (due 9/1/07) Inventory Prepaid insurance Property and equipment Accumulated depreciation Accounts payable Dividends payable Unearned rent Bonds payable, 10% (due 1/1/2012) Discount on bonds payable Common stock, $1 par Premium on common stock Retained earnings Sales (net) Cost of goods sold Selling expenses Administrative expenses 960 80,000 $20,000 8,000 3,200 1,800 12,000 600 8,000 34,580 26,400 90,000 48,600 19,750 8,170 $203,980 $203,980