The following income statement was prepared by a new and inexperienced employee in the accounting department of Phoenix, Inc., a business organized as a corporation.

Instructions.
a. Prepare a corrected income statement for the year ended December 31, 2021, using the format illustrated in Exhibit 12–2. Include at the bottom of your income statement all appropriate earnings per share figures. Assume that throughout the year the company had outstanding a weighted average of 180,000 shares of a single class of capital stock.
b. Prepare a statement of retained earnings for 2021. (As originally reported, retained earnings at December 31, 2020, amounted to $2,175,000.)
c. What does the $62,000 “gain on sale of treasury stock” represent? How would you report this item in Phoenix’s financial statements at December 31, 2021?

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PHOENIX, INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2021 Net sales ..... Gain on sale of treasury stock Excess of issuance price over par value of capital stock Prior period adjustment (net of income tax) Total revenue Less: Cost of goods sold. Selling expenses General and administrative expenses Loss from settlement of litigation.. Income tax on continuing operations Operating loss on discontinued operations (net of income tax benefit). ..... Loss on disposal of discontinued operations (net of income tax benefit) ...... Dividends declared on common stock Total costs and expenses ...... Net income ... $6,000,000 1,104,000 1,896,000 24,000 720,000 252,000 420,000 350,000 $10,800,000 62,000 510,000 96,000 $11,468,000 10,766,000 $ 702,000