Vanguard Corporation is a distributor of food products. The corporation has approximately 1,000 stockholders, and its stock, which is traded "over-the-counter," is sold throughout 2017 at about $7 a share with little fluctuation. The corporation's balance sheet at December 31, 2016, follows.

Information concerning the corporation and its activities during 2017 follows:
1. Sales for the year were $15,650,000. The gross profit percentage for the year was 30% of sales. Merchandise purchases and freight-in totaled $10,905,000. Depreciation and other expenses do not enter into cost of goods sold.
2. Administrative, selling, and general expenses (including provision for state taxes) other than interest, depreciation, and provision for doubtful accounts amounted to $2,403,250.
3. The December 31, 2017, accounts receivable amounted to $3,350,000, and the corporation maintains an allowance for doubtful accounts equal to 3% of the accounts receivable outstanding. During the year $50,000 of 2016 receivables were deemed uncollectible and charged off to the allowance account.
4. The depreciation expense for 2017 was $474,500. Fixed asset additions were $700,000.
5. The notes are payable in 20 equal quarterly installments commencing March 31, 2017, with interest at 5% per annum also payable quarterly.
6. Accounts payable and accrued liabilities at December 31, 2017, were $2,221,000.
7. The balance of the 2016 federal income tax paid in 2017 was in exact agreement with the amount accrued on the December 31, 2016, balance sheet.
8. The 2017 estimated tax payments made in 2017 totaled $400,000. Income tax expense for 2017 on an accrual accounting basis was $530,000.
9. During the second month of each quarter of 2017, dividends of $0.10 a share were declared and paid. In addition, in July 2017, a 5% stock dividend was declared and paid.
Required:
Prepare the following statements in good form and support them by well-organized and developed computations for the year ending December 31, 2017:
a. Balance sheet
b. Income statement

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Balance Sheet as of December 31, 2016 Assets Current assets Cash Accounts receivable Less allowance for doubtful accounts Inventories-at the lower of cost (FIFO) or market S 4,386,040 S 3,150,000 (94,500) 3,055,500 2,800,000 10,241,540 Total current assets Fixed assets-at cost 3,300,000 (1,300,000) Less accumulated depreciation 2,000,000 $12,241,540 Total assets Liabilities and Stockholders' Equity Current liabilities Notes payable due within one year Accounts payable and accrued liabilities Federal income taxes payable 1,000,000 2,091,500 300,000 Total current liabilities 3,391,500 4,000,000 Notes payable due after one year Stockholders' equity Capital stock-authorized 2,000,000 shares of $1 par value; issued and outstanding 1,000,000 shares Additional paid-in capital Retained earnings $1,000,000 1,500,000 2,350,040 Total stockholders' equity Total liabilities and stockholders' equity 4,850,040 $12,241,540