The following balances were taken from the books of Al Hashem.Cop on December 31, 2020.

Net sales

$800,000

Cost of goods sold

$590,000

Selling expenses

$32,500

Administrative expenses

$24,000

Dividend revenue

$10,000

Interest revenue

$3,500

Write-off of inventory due to obsolescence

$40,000

Depreciation expense omitted by accident in 2018

$20,000

Interest expense

$25,000

Cash dividends declared

$22,500

Retained earnings at December 31, 2018

$490,000

60,000 ordinary shares were outstanding during the year.

Required:

a. Prepare an income statement for 2020.

b. Prepare a retained earnings statement for 2020.