Farr Company

Cost of goods sold 270,000

Selling expenses 19,250

Pre-tax loss to factory caused by tsunami 40,000

Administrative expenses 28,250

Cash dividends declared on common stock 92,000

Other revenue 8,000

Retained earnings, December 31, 2009 $ 175,850

Other expenses 15,000

Sales 490,000

Depreciation expense understated by mistake in 2009 (net of tax) 15,400

Assume a 20% tax rate and that 40,000 shares of common stock were outstanding during the year.

1. Prepare a retained earnings statement in good form for the year ended December 31, 2010.

2. Prepare a multiple-step income statement with earnings per share in good form for the year ended December 31, 2010.