The Sikyta Company prepares quarterly and year-to-date financial statements at the end of each quarter. The income statement presented at the end of the first quarter of 2007 is:

Sales (net) ...........$62,000

Cost of goods sold .........(37,200)

Gross profit ...........$24,800

Operating expenses ........(14,074)

Pretax operating income .......$10,726

Other items

Interest expense (bonds) ....... (726)

Income before income taxes ....$10,000

Income tax expense ......... (2,000)

Net income ........... $ 8,000

Earnings per share (10,000 shares) ... $.80

The following is the Sikyta Company trial balance as of June 30, 2007:

Additional information:
1. The company uses a perpetual inventory system.
2. The company uses a control account for operating expenses.
3. Bad debts average 0.5% of net sales.
4. The company journalizes and posts adjusting entries only at the end of the year.
5. On March 1, 2007, the company rented a small warehouse, paying a year's rent of $2,400 in advance.
6. The note receivable was received from a customer on April 1, 2007. The customer will pay the note plus interest of 14% on April 1, 2008.
7. The buildings are being depreciated over a 25-year life, the equipment over a 10-year life. No acquisitions have been made in 2007. The company uses straight-line depreciation. Residual value is expected to be nominal and is not considered for depreciation.
8. The note payable was issued on April 1, 2007. It carries an annual interest rate of 13%; interest is payable on the maturity date.
9. The bonds pay interest semiannually on January 1 and July 1. Straight-line amortization of the premium is recorded at the end of each year.
10. At the end of the second quarter, it estimated that the pretax income for the remaining 6 months would total $20,000. The income tax rate schedule is 15% on the first $20,000 of taxable income and 30% on the excess. The company rounds its estimated effective income tax rate to the nearest tenth of a percent. There is no difference between the company's pretax financial income and taxable income. Income taxes will be paid during the first quarter of 2008.
11. The company declared and recorded (directly in Retained Earnings) a 30ï¿  per share semiannual dividend (on 10,000 shares) on June 30, 2007, payable on July 31, 2007.
12. The 10,000 shares of common stock have been outstanding the entire 6 months of 2007.

Required
1. Prepare a 10-column worksheet to develop the Sikyta 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.

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Debit Credit Cash Accounts receivable Allowance for doubtful accounts Note receivable (due April 2, 2008) Inventory Prepaid rent (warehouse) Land Buildings Equipment Accumulated depreciation: buildings and equipment Accounts payable Dividends payable Note payable (due October 1, 2007) Bonds payable 12% (due January 1, 2017) Premium on bonds payable Common stock, $0.50 par Additional paid-in capital Retained earnings Sales (net) Cost of goods sold Operating expenses 10,200 14,700 $ 400 5,000 29,500 2,400 12,000 80,000 18,000 23,000 9,100 3,000 6,000 25,000 960 5,000 52,000 22,968 120,000 71,420 24,208 $267,428