Jeff Halstrom, accountant for Home Bank Finance, was injured in a boating accident. Another employee prepared the following income statement for the year ended December 31, 2012:

The individual amounts listed on the income statement are correct. However, some accounts are reported incorrectly, and two items do not belong on the income statement at all. Also, income tax has not been applied to all appropriate figures. The income tax rate on discontinued operations is 30%. Home Bank Finance issued 54,000 shares of common stock in 2012 and held 4,000 shares as treasury stock during 2012. Retained earnings at December 31, 2011, was $164,000.
Requirement
1. Prepare a corrected combined statement of income and retained earnings for the fiscal year ended December 31, 2012. Prepare the income statement in single stepformat.

Transcribed Image Text:

HOME BANK FINANCE Income Statement Year ended December 31, 2012 Revenue and gains: $ 364,000 Sales Paid-in capital in excess of par-common 92,000 Total revenues and gains Expenses and losses: Cost of goods sold 456,000 108,000 Selling expenses General expenses 62,000 61,500 Sales returns 14,000 Sales discounts 8,500 Dividends 13,000 Income tax expense 33,000 Total expenses and losses 300,000 S 156,000 Income from operations Other gains and losses Gain on discontinued operations 5,500 Net income S 161,500 Earnings per share 3.23