Quila Corporation had the following income statement prepared by a new accounting intern for the fiscal year-end of December 31, 2023. The management of Quila is concerned that it was not prepared in accordance with generally accepted accounting principles. Quila is a private corporation reporting under ASPE.

Quila Corporation

Income Statement

December 31, 2023

Sales $1,500,000

Interest Revenue 45,000

Issue of Common Shares for Cash 155,000

Total Revenues $1,700,000

Less:

Cost of Goods Sold $825,000

Operating Expenses 340,000

Cash Dividends Declared on Common Shares 120,000

Total Expenses 1,285,000

Net Gain $ 415,000

Additional Information:

1. The balance of Retained Earnings was $472,000 on January 1^st, 2023.

2. Quila had a profit from discontinued operations of $70,000 and a loss on the disposal of assets of the discontinued operations of $40,000 during 2023.

3. It was discovered that sales had been overstated by $100,000 in 2022.

4. The corporate income tax rate is 50%.

Instructions:

1. Prepare a revised, corrected income statement for the year ended December 31, 2023.

2. Prepare a statement of retained earnings for the year ended December 31, 2023.