Question - Vase Company Revenue Statement December 31, 2010
Sales (net) $ 179,000
Plus: Income from operations of discontinued Division K (net of $960 income taxes) 2,240
Less: Dividends declares ($1.50 per common share) (7,500)
Net revenues $ 173,740
Less: Selling Expenses (19,000)
Gross profit 154,740
Less: Operating expenses
Interest expense $ 4,100
Loss on sale of Division K (net of $1,200 income tax credit) 2,800
Cost of goods sold 110,700
Income tax expense on income from continuing operations 5,370
Total operating expenses ( 122,970)
Operating income $ 31,770
Miscellaneous items
Dividend revenue $ 1,800
General and administrative expenses (24,300) (22,500)
Income before extraordinary items $ 9,270
Extraordinary items
Loss on sale of land $ (4,800)
Correction of error in last year's income (net of $1,500 income taxes) 3,500 (1,300)
Net Income $ 7,970
Vase Company Retained Earnings Statement December 31, 2010
Beginning retained earnings $ 62,850
Add: Net Income 7,970
Adjusted retained earnings $ 70,820
Less: Loss from expropriation (net of $2,760 income tax credit) (6,440)
Ending retained earnings $ 64,380
Required
1. Review both statements and indicate where each incorrectly classified item should be classified.
2. Prepare a correct multiple-step 2010 income statement.
3. Prepare a correct 2010 retained earnings statement.