direct method 418177

Andrews Inc., a greeting card company, had the following statements prepared as of December 31, 2012.

ANDREWS INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2012 AND 2011
	12/31/12		12/31/11
Cash	$5,890		$8,992
Accounts receivable	62,200		49,131
Short term investments (available for sale)	34,888		18,110
Inventory	39,922		60,138
Prepaid rent	4,991		4,047
Equipment	153,710		128,060
Accumulated depr.”equipment	(34,823	)	(25,013	)
Copyrights	46,037		49,864
Total assets	$312,815		$293,329

Accounts payable	$45,929		$42,103
Income taxes payable	4,149		5,970
Salaries and wages payable	7,871		3,817
Short term loans payable	7,962		9,818
Long term loans payable	60,143		67,132
Common stock, $10 par	104,300		104,300
Contributed capital, common stock	28,790		28,790
Retained earnings	53,671		31,399
Total liabilities & stockholders’ equity	$312,815		$293,329

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ANDREWS INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2012
Sales		$339,167
Cost of goods sold		175,290
Gross margin		163,877
Operating expenses		119,690
Operating income		44,187
Interest expense	$11,436
Gain on sale of equipment	2,094	9,342
Income before tax		34,845
Income tax expense		6,792
Net income		$28,053

Additional information:

1.		Dividends in the amount of $5,781 were declared and paid during 2012.
2.		Depreciation expense and amortization expense are included in operating expenses.
3.		No unrealized gains or losses have occurred on the investments during the year.
4.		Equipment that had a cost of $31,120 and was 70% depreciated was sold during 2012.