The income statement below was prepared by a new and inexperienced employee in the accounting department of Dexter, Inc., a business organizaed as a corporation:

Dexter, Inc.

Income Statement

For Year Ended December 31, 2009

Net Sales.............................................$10,200,000

Gain on sale of treasury stock...................$56,000

Excess of issuance price over par value of capital stock..................710,000

Prior Period of adjustment (net of income tax).....................$80,000

Extraordinary gain (net of income tax)..........................$110,000

Total Revenue...............$11,156,000

Less:

Cost of Goods Sold................$4,000,000

Selling Expenses...................$1,050,000

General and Adminstrative Expenses.................$840,000

Loss from settlement of litigation..........................$10,000

Income tax on continuing operations.................$612,0000

Operation loss on discontinued operations (net of income tax benefit)........................$180,000

Loss on disposal of discontinued operations (net of income tax benefit)....................$240,000

Dividends declared on common stock........................................$300,000

Total costs and expenses.......................................................$7,232,000

Net Income............................................................................$3,924,000

Instructions:

A.) Prepare a corrected income statement for the year ended December 31, 2009. Include at the bottom of your income statement all appropriate earnings per share figures. Assume that throughout the year the comany had outstanding a weighted average of $500,000 shares of a single class of capital stock.

B.) Prepare a statement of retained earnings for 2009. (As originally reported, retained earnings at December 31, 2008, amount to $3,200,000)

C.) What does the $56,000 "Gain on sale of treasury stock" represent? How would you report this item in Dexter's financial statements at December 31, 2009?