BUDDY CORPORATION ADJUSTED TRIAL BALANCE DECEMBER 31, 2020 ACCOUNTS DEBIT CREDIT CASH 24,868 ACCOUNTS RECEIVABLE 425,905 ALLOWANCE FOR DOUBTFUL ACCOUNTS 3,450 INVENTORY (at January 1, 2020) 412,812 OFFICE BUILDING 600,000 ACCUMULATED DEPRECIATION (OFFICE BUILDING) 280,000 LAND 70,600 ACCOUNTS PAYABLE 298,757 PREFERRED STOCK 100,000 COMMON STOCK, 100,000 number of shares outstanding ON DEC 31, 2020 113,866 RETAINED EARNINGS, at January 1, 2020 289,423 SALES REVENUE 3,491,148 SALES DISCOUNTS 10,571 SALES RETURNS AND ALLOWANCES 51,359 PURCHASES 2,600,824 PURCHASES DISCOUNTS 34,778 TRANSPORTATION - IN 25,235 SALARIES EXPENSE 211,599 RENT EXPENSE 40,955 INSURANCE EXPENSE 16,456 LOSS DUE TO FIRE 25,673 GAIN ON SALE OF EQUIPMENT from Continuing Operations 6,232 ADVERTISING EXPENSE 18,860 DEPRECIATION EXPENSE 28,580 GAIN ON SALE OF ASSETS from DISCONTINUED OPERATIONS 8,600 OPERATING LOSS ON DISCONTINUED OPERATIONS 12,225 CASH DIVIDENDS DECLARED -Preferred Dividends 29,732 CASH DIVIDENDS DECLARED -Common Dividends 20,000 TOTAL 4,626,254 4,626,254 NOTE: All revenue, expense figures are before taxes ADDITIONAL INFORMATION: 1. The company performed a year end physical count of its inventory as at December 31, 2020. The amount of inventory on hand at December 31, 2020 amounted to $415,700. Inventory is maintained on a PERIODIC basis. 2. Assume that the tax rate was 30%. All accounts on the Trial Balance are before tax. 3. The amount of common stock outstanding on January 1, 2020 was 50,000 In 2020, common stock was issued as follows: on April 1: 20,000 common shares were issued and on September 1: 30,000 common shares were issued. 4. An error was discovered in the company's 2019 financial statements. Depreciation Expense in 2019 was understated by $35,000. REQUIRED: 1. Prepare a detailed multi-step income statement (including EPS presentation) for the year ended December 31, 2020. Show calculations for EPS (for continuing and discontinued sections) Show details of COST OF GOODS SOLD and OPERATING EXPENSES sections. 2. Prepare a Statement of Retained Earnings for the year ended December 31, 2020.