Radiant Cosmetics Inc. shows a retained earnings balance on January 1, 2008, of $620,000. For 2008, the income from continuing operations was $210,000 before income tax. Following is a list of special items:

Income from operations of a discontinued cosmetics division . . . . . . . . .      $18,000

Loss on the sale of the cosmetics division . . . . . . . . . . . . . . . . . . . . . . . . .            50,000

Extraordinary gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 25,000

Correction of sales understatement in 2007 (net of income taxes of $21,000

to be paid when amended 2007 return is filed) . . . . . . . . . . . . . . . . . . . . .            39,000

Omission of depreciation charges of prior years (a claim has been filed for

an income tax refund of $8,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             20,000

Income taxes paid during 2008 were $82,000, which consisted of the tax on continuing operations, plus $8,000 resulting from operations of the discontinued cosmetics division and $10,000 from the extraordinary gain, less a $20,000 tax reduction for the loss on the sale of the cosmetics division. Dividends of $40,000 were declared by the company during the year (35,000 shares of common stock are outstanding).

Instructions:

Prepare the income statement for Radiant Cosmetics Inc. beginning with Income from continuing operations before income taxes. Include an accompanying retained earnings statement.