After returning from vacation, the accountant of Online Hearing Inc. was dismayed to discover that the income statement for the year ended December 31, 2020, was prepared incorrectly. All amounts included in the statement are before tax (assume a rate of 40%). The company had 200,000 common shares issued and outstanding throughout the year as well as 70,000 $1.00 cumulative preferred shares. Dividends had not been paid for the past two years (2018 and 2019). Retained earnings at December 31, 2019, were $171,000.

Required

Prepare a corrected income statement, using a multi-step format, including earnings per share information. Round all earnings per share calculations to the nearest whole cent.

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Online Hearing Inc. Income Statement December 31, 2020 Revenues: $900,000 Sales. Gain on sale of discontinued operation (pre-tax). 120,000 Accumulated depreciation, equipment. 22,500 Operating profit on discontinued operation (pre-tax). $1,360,500 318,000 Expenses: $240,000 Cost of goods sold. Selling and administrative expenses. 90,000 Sales returns and allowances. 7,000 Loss on disposal of plant assets (pre-tax) 40,000 47,500 Dividends. 424,500 $ 936,000 Profit. Earnings per share. $4 4.68