Muriel Thomas, accountant for Duchlorol Ltd., was injured in a hiking accident. Another employee prepared the income statement shown on the next page for the fiscal year ended December 31, 2014.
The individual amounts listed on the income statement are correct. However, some accounts are reported incorrectly, and others do not belong on the income statement at all. Also, income tax (30 percent) has not been applied to all appropriate figures.
Duchlorol Ltd. issued 64,000 common shares in 2009 and has not issued or repurchased common shares since that time. The Retained Earnings balance, as originally reported at December 31, 2013, was $242,500. There were no preferred shares outstanding at December 31, 2014.

Transcribed Image Text:

DUCHLOROL LTD Income Statement 2014 Revenue and gains Sales Proceeds from sale of preferred shares Gain on repurchase of preferred shares $295,000 66,000 9,500 370,500 (issued for $76,000; repurchased for $66,500) Total revenues and gains penses and losses Cost of goods sold Selling expenses General expenses Sales returns Dividends Sales discounts Income tax expense Ex $83,000 54,000 58,500 7,500 5,500 4,500 29,200 Tota l expenses and losses 242,200 Income from operations 128,300 Other gains and losses Loss on sale of discontinued operations Flood loss Operating loss on discontinued segment Correction for 2013 due to an inventory error $ (2,500) (15,000) (7,000) (2,000) Total other losses (26,500) 101 Net income Earnings per share 1.59