Preparing a corrected combined statement of income and retained earnings Jim Heller, accountant for Complete Home Finance, was injured in a boating accident. Another employee prepared the accompanying income statement for the year ended December 31, 2012.
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COMPLETE HOME FINANCE Income Statement Year ended December 31, 2012 |
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Revenue and gains: |
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Sales |
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$ 362,000 |
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Paid in capital in excess of par—common |
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93,000 |
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Total revenues and gains |
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455,000 |
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Expenses and losses: |
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Cost of goods sold |
102,000 |
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Selling expenses |
70,000 |
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General expenses |
63,500 |
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Sales returns |
12,000 |
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Sales discounts |
5,500 |
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Dividends |
17,000 |
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Income tax expense |
34,000 |
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Total expenses and losses |
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304,000 |
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Income from operations |
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$ 151,000 |
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Other gains and losses |
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Gain on discontinued operations |
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4,500 |
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Net income |
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$ 155,500 |
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Earnings per share |
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$3.11 |
The individual amounts listed on the income statement are correct. However, some accounts are reported incorrectly, and two items do not belong on the income statement at all. Also, income tax has not been applied to all appropriate figures. The income tax rate on discontinued operations was 40%. Complete Home Finance issued 55,000 shares of common stock in 2012 and held 5,000 shares as treasury stock during 2012. Retained earnings at December 31, 2011, was $167,000.
Requirement
1. Prepare a corrected combined statement of income and retained earnings for the fiscal year ended December 31, 2012, including earnings per share. Prepare the income statement in single step format.