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, 2020. 

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 2012 and has not issued or repurchased common shares since that time. The Retained Earnings balance, as originally reported at December 31, 2019, was $242,500. There were no preferred shares outstanding at December 31, 2020.

Required

Prepare a corrected combined statement of income and retained earnings for the year ended December 31, 2020; include earnings per share. Prepare the income statement portion in single-step format. Use a two-column layout. Report expenses from largest to smallest.

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DUCHLOROL LTD. Income Statement 2020 Revenue and gains Sales $295,000 Proceeds from sale of preferred shares Gain on repurchase of preferred shares (issued for $76,000; repurchased for $66,500) Total revenues and gains Expenses and losses Cost of goods sold Selling expenses 66,000 9,500 370,500 $ 83,000 54,000 General expenses 58,500 Sales returns 7,500 Dividends 5,500 Sales discounts 4,500 Income tax expense 29,200 Total expenses and losses Income from operations 242,200 128,300 Other gains and losses Loss on sale of discontinued operations $ (2,500) Flood loss (15,000) (7,000) Operating loss on discontinued segment Correction for 2019 due to an inventory error (2,000) Total other losses (26,500) Net income $101,800 Earnings per share $ 1.59