Stearns Corporation was a diversified company with two separate lines of business - chemicals and financial services. At the beginning of 20X7, Strearns sold its financial services unit, resulting in a \($3\),000,000 pretax gain. The following additional transactions and events pertain to 20X7:

The chemical unit sold a paint factory at pretax loss of \($500\),000. This asset sale did not represent the sale of a business unit.

The company incurred a \($700\),000 clean-up cost (pretax) associated with an accidental release of potentially hazardous chemicals. The company has very strong controls to prevent such events, and this occurred only because of a series of nonrecurring and unusual system failures. The loss is judged to be extraordinary.

General information for 20X7 is as follows: Sales, \($7\),500,000; Cost of Goods Sold, \($3\),200,000;

Selling Expenses, \($1\),000,000; and General & Administrative Expenses, \($1\),500,000. The company's income tax rate is 30%.

Stearns changed its method of accounting for inventory at the beginning of 20X7. The cost of goods sold of \($3\),200,000 is based on the new method. Cumulatively, prior years' income would have been \($2\),400,000 higher (net of tax effects) had the new method been in use all along.

The company discovered an error in a prior year's report. The error resulted in a \($420\),000 overstatement of 20X5 net income.

(a) Prepare the 20X7 income statement for Stearns Corporation.

(b) Retained earnings at January 1, 20X7, was \($5\),500,000, before giving consideration to the correction of error or accounting change described above. What is the balance of the revised beginning retained earnings?

(c) If the company had \($400\),000 of other comprehensive income (net of any tax effects) related to holding gains on available for sale securities, how much is total "comprehensive income?"