The following list, in alphabetical order, shows the various items that regularly appear on the financial statements of Sterns Audio Book Rental Corp. The amounts shown for balance sheet items are balances as of December 31, 2014 (with the exception of retained earnings, which is the balance on January 1, 2014), and the amounts shown for income statement items are balances for the year ended December 31, 2014.
Required
1. Prepare an income statement for the year ended December 31, 2014.
2. Prepare a statement of retained earnings for the year ended December 31, 2014.
3. Prepare a balance sheet at December 31, 2014.
4. You have $1,000 to invest. On the basis of the statements you prepared, would you use it to buy stock in this company? Explain. What other information would you want before deciding?
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