The following pretax amounts are taken from the accounts of J&J Inc. at December 31, 2020, its annual year-end ($ thousands). Assume an average 25% tax rate on all items.

Sales revenue	$136,000
Cost of goods sold	68,000
Selling and administrative expenses	36,000
Gain on sale of land held for speculation	12,000
Prior period adjustment, correction of error from 2019, pretax (a debit)	6,400
Interest expense	800
Cash dividends declared and paid	2,000
Retained earnings, December 31, 2019	41,200
Common stock, outstanding.	25,000 shares

Required

a. Prepare a multiple-step income statement, including intraperiod income tax allocation and EPS disclosure.

• Do not use negative signs with any of your answers.
• Enter the answer for earnings per share in dollars and cents, rounded to the nearest penny.

b.

Determine the December 31, 2020, balance in retained earnings.

Answer