Lane Collins, accountant for Santa Rosa Book Distributors, was injured in a skiing accident. Another employee prepared the accompanying income statement for the fiscal year ended December 31, 19X3.

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 ( 40 percent) has not been applied to all appropriate figures. Santa Rosa issued 52,000 shares of common stock in 19X1 and held 2,000 shares as treasury stock during 19X3. The retained earnings balance, as originally reported at December \(31,19 \times 2\), was \(\$ 111,000\).

\section*{Required}
Prepare a corrected combined statement of income and retained earnings for \(19 \mathrm{X} 3\); include earnings per share. Prepare the income statement in single-step format.

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SANTA ROSA BOOK DISTRIBUTORS INCOME STATEMENT 19X3 Revenue and gains: Sales. Gain on retirement of preferred stock (issued for $81,000; purchased for $71,000). Paid-in capital in excess of par-common. Total revenues and gains...... $362,000 10,000 80,000 452,000 Expenses and losses: Cost of goods sold $105,000 Selling expenses. General expenses Sales returns.. Dividends. Sales discounts. Income tax expense.. Total expenses and losses.. 56,000 61,000 11,000 7,000 6,000 20,000 266,000 Income from operations.............. 186,000 Other gains and losses: Gain on sale of discontinued operations........ $ 10,000 Extraordinary flood loss. (20,000) Operating loss on discontinued segment. (13,000) Prior-period adjustment-understated income tax for 19X2 Total other losses. Net income.. Earnings per share.. (14,000) (37,000) $149,000 $ 2.98