(Multi-step Income, Retained Earnings) Presented below is information related to American Horse Company for 2004.

Instructions Prepare a multi-step income statement and a retained earnings statement. American Horse Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, American Horse sold the wholesale operations to Rogers Company. During 2004, there were 300,000 shares of common stock outstanding all year.

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Retained earnings balance, January 1, 2004 Sales for the year Cost of goods sold Interest revenue Selling and administrative expenses Write-off of goodwill (not tax deductible) Income taxes for 2004 $ 980,000 25,000,000 17,000,000 70,000 4,700,000 820,000 Gain on the sale of investments (normal recurring) Loss due to flood damage extraordinary item (net of tax) Loss on the disposition of the wholesale division (net of tax) Loss on operations of the wholesale division (net of tax) Dividends declared on common stock Dividends declared on preferred stock 905,000 110,000 390,000 440,000 90,000 250,000 70,000