Misclassifications Olson Company's bookkeeper prepared the following income statement and retained earnings statement for the year ended December 31, 2019: December 31, 2019 Expense and Profits Statement Sales (net) $196,000 (19,600) Less: Selling expenses INet sales $176,400 Add: Interest revenue 2,300 Add: Gain on sale of equipment 3,200 Gross sales revenues $ 181,900 Less: Costs of operations: $120,100 3,850 Cost of goods sold Correction of overstatement in last year's income because of error (net of $1,650 income tax credit) Dividend costs ($0.50 per share for 8,000 common shares) Loss because of earthquake (net of $1,800 income tax credit) Taxable revenues Less: Income tax on income from continuing operations 4,000 4,200 (132,150) $49,750 (12,480) $37,270 Net income Miscellaneous deductions Loss from operations of discontinued Division L (net of $900 income tax credit) $ 2,100 Administrative expenses 16,800 (18,900) $18,370 Net revenues $18,370 Retained Revenues Statement For Year Ended December 31, 2019 Beginning retained earnings Add: Gain on sale of Division L (net of $1,350 income taxes) Recalculated retained earnings $59,300 3,150 $62,450 Add: Net revenues 18,370 $80,820 (3,400) $77,420 Less: Interest expense Ending retained earnings The preceding account balances are correct but have been incorrectly classified in certain instances. Assume the income tax amounts are correct and linked to the appropriate items. Required: Prepare a corrected multiple-step income statement for the year ended December 31, 2019. Round earnings per share computations to two decimal places. OLSON COMPANY OLSON COMPANY Income Statement (Multi-Step) For Year Ended December 31, 2019 Sales (net) 196,000 Cost of goods sold -120,000 Gross profit 75,900 Operating expenses Selling expenses 19,600 Administrative expenses 16,800 -36,400 Total operating expenses Operating income 39,500 Other items Interest revenue 2,300 Gain on sale of equipment 3,200 Gain on sale of equipment x Interest expense -3,400 2,100 Pretax income from continuing operations 41,600 x Income tax expense -12,480 X TTCome tax expense -12,480 X Income from continuing operations 29,120 Results from discontinued operations Loss from operations of discontinued Division L (net of income tax credit) 2,100 Gain on sale of Division L (net of income taxes) 3,150 -1,050 Net income 30,170 X EPS Components of Income Income from continuing operations Results from discontinued operations Net income 25,970 X Feedback Check My Work For this problem, you should compare the statements that you were given to the following examples. You should consider headings, classifications and account names. Check figure: Net Income = $25,970 Example of multiple step income statement: Banner Corporation Income Statement