Rox Corporation€™s multiple-step income statement and retained earnings statement for the year ended December 31, 2016, as developed by its bookkeeper, are shown here:

Retained Earnings Statement
December 31, 2016
Beginning retained earnings ...............$62,850
Add: Net income .................... 7,970
Adjusted retained earnings .................$70,820
Less: Loss from theft (net of $ 2,760 income tax credit) .... (6,440)
Ending retained earnings .................$64,380
You determine that the account balances listed on the statements are correct but are incorrectly classified in certain cases. The company faces a 30% tax rate. No shares of common stock were issued or retired during 2016.
Required:
1. Review both statements and indicate where each incorrectly classified item should be classified.
2. Prepare a correct multiple-step income statement for 2016.
3. Determine the correct beginning balance in retained earnings, and then prepare a correct 2016 retained earnings statement.

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Revenue Statement December 31, 2016 $179,000 2,240 173,740 154,740 Sales (net) Plus: Income from operations of discontinued Division PInet of $960 income Less: Dividends declared ($1.50 per common share) Nel revenues Less: Selling expenses Gross profit Less: Operating expenses: Interest expense Loss on sale of Division P (net of $1,200 income tax credit) Cost of goods sold $ 4,100 2,800 110,700 5,370 Income tax expense on income from continuing operations Tolal operating expenses Operating income 122,97 31,770 Miscellaneous items Dividend revenue General and administrative expenses $ 1,800 Income before extraordinary items Extraordinary items: 9,270 Loss on sale of land Correction of error in last year's income (net of $1,500 income taxes) 4,800] Nel income