Jim Heller, accountant for Complete Home Finance, was injured in a boating acci- dent

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P13-29A 5 Preparing a corrected combined statement of income and retained earnings [25–35 min]

Jim Heller, accountant for Complete Home Finance, was injured in a boating acci- dent. Another employee prepared the accompanying income statement for the year ended December 31, 2012.

COMPLETE HOME FINANCE Income Statement Year ended December 31, 2012
Revenue and gains:
Sales		$ 362,000
Paid-in capital in excess of par—common		93,000
Total revenues and gains		455,000
Expenses and losses:
Cost of goods sold	102,000
Selling expenses	70,000
General expenses	63,500
Sales returns	12,000
Sales discounts	5,500
Dividends	17,000
Income tax expense	34,000
Total expenses and losses		304,000
Income from operations		$ 151,000
Other gains and losses
Gain on discontinued operations		4,500
Net income		$ 155,500
Earnings per share		$ 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 dur- ing 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.