Preparing a corrected combined statement of income and retained earnings Jeff Halstrom, accountant for Home Bank Finance, was injured in a boating accident. Another employee prepared the following income statement for the year ended December 31, 2012:

HOME BANK FINANCE Income Statement Year ended December 31, 2012
Revenue and gains:	Â	Â
Sales	Â	$ 364,000
Paid-in capital in excess of par—common	Â	92,000
Total revenues and gains	Â	456,000
Expenses and losses:	Â	Â
Cost of goods sold	108,000	Â
Selling expenses	62,000	Â
General expenses	61,500	Â
Sales returns	14,000	Â
Sales discounts	8,500	Â
Dividends	13,000	Â
Income tax expense	33,000	Â
Total expenses and losses	Â	300,000
Income from operations	Â	$ 156,000
Other gains and losses	Â	Â
Gain on discontinued operations	Â	5,500
Net income	Â	$ 161,500
Earnings per share	Â	$3.23

The individual amounts listed on the income statement are correct. However, some accounts are reported incorrectly, and two items do not belong on the income statement at all. Also, income tax has not been applied to all appropriate figures. The income tax rate on discontinued operations is 30%. Home Bank Finance issued 54,000 shares of common stock in 2012 and held 4,000 shares as treasury stock during 2012. Retained earnings at December 31, 2011, was $164,000.

Requirement

1. Prepare a corrected combined statement of income and retained earnings for the fiscal year ended December 31, 2012. Prepare the income statement in singlestep format.