The following income statement was prepared by a new and inexperienced employee in the accounting department of Phoenix, Inc., a business organized as a corporation.

PHOENIX, INC.INCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2018Net sales$10,800,000

Gain on sale of treasury stock62,000

Excess of issuance price over par value of capital stock510,000

Prior period adjustment (net of income tax)96,000

Total revenue$11,468,000

Less:

Cost of goods sold$6,000,000

Selling expenses1,104,000

General and administrative expenses1,896,000

Loss from settlement of litigation24,000

Income tax on continuing operations720,000

Operating loss on discontinued operations (net of income tax benefit)252,000

Loss on disposal of discontinued operations (net of income tax benefit)420,000

Dividends declared on common stock350,000

Total costs and expenses10,766,000

Net income$702,000

b.Preparea statement of retained earnings for 2018. (As originally reported, retained earnings at December 31, 2017, amounted to $2,175,000.)

question and answer to part A

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