The Following Is the December 31, 2004 Balance Sheet for the Epics

The following is the December 31, 2004 balance sheet for the Epics Corporation. $\begin{array}{lrlr}\text { Assets }&&\text { Liabilities }\\\text { Cash } & \$ 70,000 & \text { Accounts payable } & \$ 100,000 \\\text { Accounts receivable } & 150,000 & \text { Notes payable } & 120,000 \\\text { Inventory } & \underline{280,000} & \text { Bonds payable } & \underline{300,000} \\\text { Total current assets } & 500,000 & \text { Total liabilities } & 520,000\\\\\text { Plant and equipment } & 1,250,000 & \text { Equity } \\\text { Less: ace, amortization } &{250,000} & \text { Common stock } & 500,000 \\\text { Net plant and Equipment } & 1,000,000 & \text { Retained earnings } & \mathbf{4 8 0 , 0 0 0}\\&&\text { Total equity }&980,000\\\text { Total assets }&\$ 1,500,000&\text { Total liab. \& equity }&\$ 1,500,000\\\end{array}$ Sales for 2005 were $2,000,000, with the cost of goods sold being 55% of sales. Amortization expense was 10% of the gross plant and equipment at the beginning of the year. Interest expense was 9% on the notes payable and 11% on the bonds payable. Selling, general, and administrative expenses were $200,000 and the firm's tax rate is 40%.
A). Prepare an income statement.
B). If the dividend payout ratio for Epics is 35%, what is the value of the retained earnings account on December 31, 2005?