Sales (net)

$196,000

 

Less: Selling expenses

   (19,600)

 

Net sales

$176,400

 

Add: Interest revenue

2,300

 

Add: Gain on sale of equipment

      3,200

 

Gross sales revenues

$ 181,900

 

 

Less: Costs of operations Cost of goods sold

 

$120,100

 

 

Correction of overstatement in last year’s income because of error (net of $1,650 income tax  credit)

 

3,850

 

Dividend costs ($0.50 per share for 8,000 common   shares)

4,000

 

Extraordinary loss because of earthquake (net of $1,800 income tax   credit)

     4,200

 (132,150)

 

Taxable revenues

 

$ 49,750

 

Less: Income tax on income from continuing operations

 

(12,480)

 

Net income Miscellaneous  deductions

 

$ 37,270

 

Loss from operations of discontinued Division L (net of $900 income tax credit)

$   2,100

 

 

Administrative expenses

    16,800

   (18,900)

 

Net revenues

 

$ 18,370

Beginning retained earnings

$59,300

Add: Gain on sale of Division L (net of $1,350 income  taxes)

    3,150

Recalculated retained earnings

$62,450

Add: Net revenues

  18,370

 

$80,820

Less:  Interest expense

(3,400)

Ending retained earnings

$77,420