Thomas Wong, accountant for APB Bikes Ltd., was injured in a biking accident. Another employee prepared the income statement shown on the next page for the fiscal year ended September 30, 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 (25 percent) has not been applied to all appropriate figures. APB Bikes Ltd. issued 30,000 common shares in 2012 and has not issued or repurchased common shares since that date. The Retained Earnings balance, as originally reported at September 30, 2019, was $660,000. There were no preferred shares outstanding at September 30, 2020.

Required

Prepare a corrected combined statement of income and retained earnings for fiscal year 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.

Transcribed Image Text:

APB BIKES LTD. Income Statement September 30, 2020 Revenues and gains Sales $1,000,000 Gain on repurchase of preferred shares (issued for $60,000; repurchased for $48,000) 12,000 Total revenues and gains 1,012,000 Expenses and losses Cost of goods sold $478,000 Selling expenses 133,000 General expenses 60,000 Sales returns 13,000 Correction of an error from a prior period-understated income tax for 2019 due to error 10,000 Dividends 14,000 Sales discounts 18,000 Income tax expense 98,700 Total expenses and losses 824,700 Income from operations 187,300 Other gains and losses Operating income on discontinued segment 16,000 Loss on sale of discontinued operations (32,000) Total other gains and losses (16,000) Net income $ 171,300 Earnings per share $. 5. 71