P4-5B (L04,5.6) (Irregular Items) Presented below is a combined single-step income and retained earnings statement for OFD Company for 2017. Net sales $860,000 Costs and expenses Cost of goods sold $ 600,000 Selling, general, and administrative expenses 121,000 Other, net 12,000 733,000 Income before income tax 127,000 Income tax 42,400 Net income 84,600 Retained earnings at beginning of period, as previously reported 210,000 Adjustment required for correction of error 21,000 Retained earnings at beginning of period, as restated 231,000 Dividends on common stock (52,500) Retained earnings at end of period $263,100 Additional facts are as follows. 1. "Selling, general, and administrative expenses" for 2017 included a charge of $11,000,000 that was usual but infrequently occurring 2. "Other, net" for 2017 included an unusual gain of $8,500,000. If the unusual gain had not occurred, income taxes for 2017 would have been $40,200,000 instead of $42,400,000. 3. "Adjustment required for correction of an error" was a result of a change in estimate (useful life of certain assets reduced to 8 years and a catch-up adjustment made). 4. OFD Company disclosed earnings per common share for net income in the notes to the nancial statements. Instructions Determine from these additional facts whether the presentation of the facts in the OFD Company income and retained earnings statement is appropriate. If the presentation is not appropriate, describe the appropriate presentation and discuss its theoretical rationale. (Do not prepare a revised statement.) P4-6B (L03.4,6,7) (Retained Earnings Statement, Prior Period Adjustment) Below is the Retained Earnings account for the year 2017 for Cooper Corp. Retained earnings, January 1 , 2017 $616,050 Add: Gain on discontinued operations (net of tax) $ 12,000 Net income 168,300 Gain on sale of investments (net of tax) 41,200 Cumulative effect on income of prior years in changing from LIFO to FIFO inventory valuation in 2017 (net of tax) 52,600 Refund on litigation with government, related to the year 2014 (net of tax) 51,600 Recognition of income earned in 2016, but omitted from income statement in that year (net of tax) 49,700 375,400 991,450 Deduct: Write-off of goodwill (net of tax) 250,000 Cash dividends declared 60,000 310,000 Retained earnings, December 31 , 2017 $681,450