J. Mair has been employed as a bookkeeper at Problems Inc. for a number of years. With the assistance of a clerk, Mair handles all accounting duties, including the preparation of financial statements. The following is a statement of earned surplus prepared by Mair for 2011:

Instructions:
1. Prepare a schedule showing the correct net income for 2011. (Ignore income taxes.)
2. Prepare a retained earnings statement for 2011.
3. Explain why you have changed the retained earningsstatement.

Problems Inc. Statement of Earned Surplus for 2011 Balance at beginning of year Additions: $76,843 Change in estimate of 2011 amortization expense..$ 3,100 Galn on sale of land Interest revenue Profit and loss for 201 17,420 3,900 12,760 Total additions. 37,180 Total $114.023 Increased depreclation due to change In estimated lfe.. Dividends declared and pald Loss on sale of equlpment Loss from major casualty (extraordinary)- 6.400 2,000 2.490 25,310 Total deductions Balance at end of year 46.200 $ 67,823