The following income statement was prepared by a new and inexperienced employee in the accounting department of Dexter, Inc., a business organized as a corporation.

Instructions
a. Prepare a corrected income statement for the year ended December 31, 2021, using the format illustrated in Exhibit 12–2. Include at the bottom of your income statement all appropriate earnings per share figures. Assume that throughout the year the company had outstanding a weighted average of 500,000 shares of a single class of capital stock.
b. Prepare a statement of retained earnings for 2021. (As originally reported, retained earnings at December 31, 2020, amount to $3,200,000.)
c. What does the $56,000 “Gain on sale of treasury stock” represent? How would you report this item in Dexter’s financial statements at December 31, 2021?

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DEXTER, INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2021 Net sales .... Gain on sale of treasury stock ... Excess of issuance price over par value of capital stock.... Prior period adjustment (net of income tax) Total revenue Cost of goods sold .. Selling expenses General and administrative expenses Loss from settlement of litigation ... Income tax on continuing operations Operating loss on discontinued operations (net of income tax benefit) .... Loss on disposal of discontinued operations (net of income tax benefit) .... Dividends declared on common stock Total costs and expenses.. Net income Less: $4,000,000 1,050,000 840,000 10,000 612,000 180,000 240,000 300,000 $10,200,000 56,000 710,000 190,000 $11,156,000 7,232,000 $ 3,924,000