(L. OBJ. 5) Preparing a corrected combined statement of income and retained earnings [25...

(L. OBJ. 5) Preparing a corrected combined statement of income and retained earnings [25—35 min].

Jack Hodges, accountant for Home Mortgage Finance, was injured in a boating accident. Another employee prepared the accompanying income statement for the year ended December 31, 2010.

The individual amounts listed on the Income statement arc 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 figure, The income tax rate on discontinued operations was 30%. Home Mortgage Finance issued 56,000 shares of common stock in 2010 and held 6,000 shares as treasury stock during 2010. Retained earnings at December 31, 2009, was $163,000.

Requirement

1. Prepare a corrected combined statement of income and retained earnings for 2010, including earnings per share. Prepare the income statement in single-step format.