Preparing a corrected combined statement of income and retained earnings [25-35 min]Jeff H...

Preparing a corrected combined statement of income and retained earnings [25-35 min]

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:

The individual amounts listed on the income statement are correct. However, some accounts are reported incorrectly, and two items do not belong on the incomestatement at all. Also, income tax has not been applied to all appropriate figures. Theincome tax rate on discontinued operations is 30%. Home Bank Finance issued54,000 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.