The income statement below was prepared by a new and
The income statement below 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, 2011, 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 2011. (As originally reported, retained earnings at December 31, 2010, 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 31,2011?
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