The following is the trial balance of Thompson Corporation at December 31, 2020. Credit 10,000 $ $ $ $ $ 18,000 160,000 18,000 1,100,000 $ 49,000 28,000 $ $ 70,000 THOMPSON CORPORATION Trial Balance December 31, 2020 Debit Purchase Discounts Cash $ 189,700 Accounts Receivable $ 105,000 Rent Revenue Retained Earnings Salaries and Wages Payable Sales Revenue Notes Receivable $ 110,000 Accounts Payable Accumulated Depreciation-Equipment Sales Discounts $ 14,500 Sales Returns and Allowances $ 17,500 Notes Payable Selling Expenses $ 232,000 Administrative Expenses $ Common Stock Income Tax Expense 53,900 Cash Dividends 45,000 Allowance for Doubtful Accounts Supplies 14,000 Freight-in $ 20,000 Land $ 70,000 Equipment $ 140,000 Bonds Payable Gain on Sale of Land Accumulated Depreciation - Buildings Inventory $ 89,000 Buildings $ 98,000 Purchases $ 610,000 Totals $ 1,907,600 $ 300,000 5,000 $ $ $ 100,000 30,000 19,600 $ 1,907,600 A physical count of inventory on December 31 resulted in an inventory amount of $64,000. Thus, cost of goods sold for 2020 is $645,000. Instructions Prepare a single-step Income statement and a retained earnings statement. Assume that the only changes in retained earnings during the current year were from net income and dividends. Thirty thousand shares of common stock were outstanding the entire year. THOMPSON CORPORATION Income Statement For the Year Ended December 31, 2020 Revenues Net sales Gain on disposal of land Rent revenue Total revenues Expenses Cost of goods sold Selling expenses Administrative expenses Total expenses Income before income tax Income tax Net income Earnings per share THOMPSON CORPORATION Retained Earnings Statement For the Year Ended December 31, 2020 Retained earnings, January 1 Add: Net Income Less: Cash dividends Retained earnings, December 31 Maher Inc. reported income from continuing operations before taxes during 2020 of $790,000. Additional transactions occurring in 2020 but not used in computing the $790,000 are as follows. > Sale of securities held as a part of its portfolio resulted in a loss of $57,000 (pretax). > When its president died, the corporation realized $150,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $46,000. The gain is nontaxable. > The corporation experienced an uninsured flood loss in the amount of $90,000 during the year. > At the beginning of 2020, the corporation purchased a machine for $54,000 (salvage value of $9,000). The machine had a useful life of 6 years and is depreciated straight-line. The bookkeeper failed to deduct the salvage value in computing the depreciation base. > The corporation disposed of its recreational division at a loss of $115,000 before taxes. Assume that this transaction meets the criteria for discontinued operations. Prepare an income statement for the year 2020 starting with income from continuing operations before taxes. Compute earnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year are 120,000 shares. (Assume a tax rate of 30% on all items, unless indicated otherwise.) Computation of income from continuing operations before taxes: As previously stated Loss on sale of securities $ 790,000 Gain on proceeds of life insurance policy Flood loss Error in computation of 2020 depreciation: As computed Corrected As restated Computation of income tax: Income from continuing operations before taxes Nontaxable income again on life insurance) Taxable income Tax rate Income tax MAHER INC Income Statement (Partial) For the Year Ended December 31, 2020 continued from previous page) $ 748,500.00 Income from continuing operations before income tax (from above) Income tax (from above) $ 193,350.00 Income from continuing operations Discontinued operations: Loss from disposal of recreational division Less: Applicable income tax reduction Net Income Per share of common stock: Income from continuing operations Discontinued operations, net of tax Net Income