Account balances taken from the ledger of Royal Distributing Co. on December 31, 2008, follow:

Cash	$ 35,000
Accounts Receivable	91,000
Allowance for Bad Debts	1,800
Inventory	92,000
Long-Term Investments	27,500
Land	53,400
Buildings	112,500
Accumulated Depreciation—Buildings	26,780
Accounts Payable	47,300
Mortgage Payable	99,500
Capital Stock, $5 par	175,000
Retained Earnings, December 31, 2007	14,840
Dividends	9,670
Sales	359,000
Sales Returns	12,890
Sales Discounts	7,540
Cost of Goods Sold	158,520
Selling Expenses	62,350
Office Expenses	38,900
Insurance Expense	14,000
Supplies Expense	4,800
Taxes—Real Estate and Payroll	$ 9,500
Interest Revenue	550
Interest Expense	3,200

Information relating to adjustments on December 31, 2008, follows:

(a) Allowance for Bad Debts is to be increased by $2,000.

(b) Buildings have a salvage value of $7,500. They are being depreciated at the rate of 10% per year.

(c) Accrued selling expenses are $8,600.

(d) There are supplies of $1,250 on hand.

(e) Prepaid insurance relating to 2009 totals $4,000.

(f) Total interest revenue earned in 2008 is $1,400.

(g) Accrued real estate and payroll taxes are $2,340.

(h) Accrued interest on the mortgage is $1,780.

(i) Income tax is estimated to be 40% of income.

Instructions:Prepare a work sheet showing the net income and balance sheet totals for the year ending December 31, 2008.