Income statement and retained earnings statement Porter Corporation's capital structure consists of 50,000 shares of common stock. At December 31, 2010 an analysis of the accounts and discussions with company officials revealed the following information: Sales Purchase discounts Purchases Earthquake loss (net of tax) (extraordinary item) Selling expenses Cash Accounts receivable Common stock Accumulated depreciation Dividend revenue Inventory, January 1, 2010 Inventory, December 31, 2010 $1,100,000 18,000 642,000 42,000 128,000 60,000 90,000 200,000 180,000 8,000 152,000 Unearned service revenue 125,000 4,400 Accrued interest payable 1,000 Land 370,000 Patents 100,000 Retained earnings, January 1, 2010 290,000 Interest expense 17,000 General and administrative expenses 150,000 Dividends declared 29,000 Allowance for doubtful accounts 5,000 Notes payable (maturity 7/1/13) Machinery and equipment Materials and supplies Accounts payable The amount of income taxes applicable to ordinary income was $48,600, excluding the tax effect of the earthquake loss which amounted to $18,000. Required: (a) Prepare a multiple-step income statement. (b) Prepare a retained earnings statement. 200,000 450,000 40,000 60,000