The comparative balance sheet of the Forty-Misty Company shows the following data:

During 1980, common stockholders received \(\$ 60,000\) in cash dividends and \(\$ 120,000\) in stock dividends. A refund on 1978 taxes of \(\$ 30,000\) was received on March 1, 1980, and was credited directly to Retained Earnings. A loss on retirement of plant assets of \(\$ 5,600\) occurred during the year and was charged directly to Retained Earnings.
a What net income is reported for 1980 after the accounting was done as described?
b What net income should actually be reported for 1980? Show your calculations.

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Common Stock Retained Earnings Total Stockholders' Equity Dec. 31, 1979 Dec. 31, 1980 $1,200,000 460,000 $1,660,000 $1,320,000 400,000 $1,720,000