The bookkeeper for the Olson Company prepared the following income statement and retained earnings statement for the year ended December 31, 2007:

The preceding account balances are correct but have been incorrectly classified in certain instances.

Required
Prepare a corrected 2007 multiple-step income statement and a 2007 retained earningsstatement.

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OLSON COMPANY December 31, 2007 Expense and Protits Statement Sales (net) Less: Selling expenses Net sales Add: Interest revenue Add: Gain on sale of equipment 196,000 19,600) 176,400 2.300 3.200 $181,900 Gross sales revenues Less: Costs of operations Cost of goods sold Correction of overstatement in last year's income because of error $120,100 (net of $1,650 income tax credit) Dividend costs (S0.50 per share for 8,000 common shares) Extraordinary loss because of earthquake (net of $1,800 income tax credit4,200 (132,150) 3,850 4,000 49.750 12,480 37,270 Taxable revenues Less: Income tax on income from continuing operations Net income Miscellaneous deductions Loss from operations of discontinued Division L (net of $900 income tax credit) Administrative expenses 2,100 16,800 (18,900) Net revenues S 18,370 OLSON COMPANY Retained Revenues Statement For Year Ended December 31, 2007 Beginning retained earnings Add: Gain on sale of Division L. (net of $1,350 income taxes) Recalculated retained earnings Add: Net revenues $59,300 3,150 $62,450 18.370 $80,820 (3,400) Less: Interest expense Ending retained earnings