The income statement below was prepared by a new and inexperienced employee in the accounting department of Phoenix, 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 180,000 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, amounted to $2,175,000.)
c. What does the $62,000 “gain on sale of treasury stock” represent? How would you report this item in Phoenix’s financial statements at December 31,2011?

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Exhibit 12-2 EARNINGS PER SHARE PRESENTATION PERRY CORPORATION CONDENSED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011 Net sales $9,115,000 Costs and expenses (including tax on continuing operations) Income from continuing operations Loss from discontinued operations (net of 8,310,000 $ 805,000 income tax benefits) Income before extraordinary items Extraordinary loss (net of income tax benefit) Net income Earnings per share of common stock: (90,000) $ 715,000 $ (120,000) $ 595,000 $3.67a (0.45) $3.22 (0.60) $2.62c Earnings from continuing operations Loss from discontinued operations Earnings before extraordinary items Extraordinary loss Net earnings ($805,000 $72,000 preferred dividends)200,000 shares "($715,000-$72,000) ÷ 200,000 shares "($595,000-$72,000) ÷ 200,000 shares