P4-1 (Multiple-step Income, Retained Earnings) Presented below is information related to American Horse Company for 2007. Retained earnings balance, January 1, 2007 $ 980,000 Sales for the year 25,000,000 Cost of goods sold 17,000,000 Interest revenue 70,000 Selling and administrative expenses 4,700,000 Write-off of goodwill (not tax deductible) 820,000 Income taxes for 2007 905,000 Gain on the sale of investments (normal recurring) 110,000 Loss due to flood damage extraordinary iter (net of tax) 390,000 Loss on the disposition of the wholesale division (net of tax) 440,000 Loss on operations of the wholesale division (net of tax) 90,000 Dividends declared on common stock 250,000 Dividends declared on preferred stock 70,000