Plush Textiles Inc. shows a retained earnings balance on January 1, 2013, of $580,000.
For 2013, the income from continuing operations was $240,000 before income tax.
Following is a list of special items:
Income from operations of a discontinued textiles division . . . . . . . . . . . . . . . . . . . . . $22,000
Loss on the sale of the textiles division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Extraordinary gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,000
Correction of sales understatement in 2012 (net of income taxes of $17,500 to be paid when amended 2012 return is filed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,500
Omission of depreciation charges of prior years (a claim has been filed for an income tax refund of $6,400) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Income taxes paid during 2013 were $87,200, which consisted of the tax on continuing operations, plus $8,800 resulting from operations of the discontinued textiles division and $12,400 from the extraordinary gain, less a $24,000 tax reduction for the loss on the sale of the textiles division. Dividends of $45,000 were declared by the company during the year (30,000 shares of common stock are outstanding).
Instructions:
Prepare the income statement for Plush Textiles Inc. beginning with Income from continuing operations before income taxes. Include an accompanying retained earnings statement?