P4.5B (LO 2,3,4,5) (Irregular Items) Presented below is a combined single-step income and retained earnings statement for OFD Company for 2020. $860,000 $ 600,000 121,000 12,000 Net sales Costs and expenses Cost of goods sold Selling general, and administrative expenses Other, net Income before income tax Income tax Net income Retained earings at beginning of period, as previously reported Adjustment required for correction of error Retained earnings at beginning of period, as restated Dividends on common stock Retained earnings at end of period 733.000 127,000 42.400 84,600 210,000 21,000 231,000 (52,500) $263,100 Additional facts are as follows: 1. "Selling general, and administrative expenses" for 2020 included a charge of $11,000,000 that was usual but infrequently occurring. 2. "Other, net" for 2020 included an unusual gain of $8,500,000. If the unusual gain had not occurred income taxes for 2020 would have been $40,200,000 instead of 542,400,000 3. "Adjustment required for correction of an error" was a resfalt of a change in estimate (useful life of certain assets reduced to 8 years and a catch-up adjustment made). 4. OFD Company disclosed earings per common share for net income in the notes to the financial statements. Instructions Determine from these additional facts whether the presentation of the facts in the OFD Company income and retained earnings statement is appropriate. If the presentation is not appropriate, describe the appropriate presentation and discuss its theoretical rationale. (Do not prepare a revised statement.)