Kelley Corp., a merchandiser, recently completed its 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow.

KELLEY CORPORATION

Comparative Balance Sheets

December 31, 2017 and 2016

2017 2016

Assets

Cash $ 335,000 $ 216,000

Accounts receivable 118,000 101,000

Inventory 624,000 546,000

Total current assets 1,077,000 863,000

Equipment 378,000 329,000

Accum. depreciation—Equipment (178,000 ) (114,000 )

Total assets $ 1,277,000 $ 1,078,000

Liabilities and Equity

Accounts payable $ 111,000 $ 91,000

Income taxes payable 30,000 27,000

Total current liabilities 141,000 118,000

Equity

Common stock, $2 par value 712,000 668,000

Paid-in capital in excess of par value, common stock 253,000 187,000

Retained earnings 171,000 105,000

Total liabilities and equity $ 1,277,000 $ 1,078,000

KELLEY CORPORATION

Income Statement

For Year Ended December 31, 2017

Sales $ 2,185,000

Cost of goods sold 1,324,000

Gross profit 861,000

Operating expenses

Depreciation expense $ 64,000

Other expenses 602,000 666,000

Income before taxes 195,000

Income taxes expense 59,690

Net income $ 135,310

Additional Information on Year 2017 Transactions

Purchased equipment for $49,000 cash.

Issued 22,000 shares of common stock for $5 cash per share.

Declared and paid $69,310 in cash dividends.