Company has calculated its pretax income

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At the beginning of 2010, the retained earnings of the Cameron Company were $212,000. For 2010, the company has calculated its pretax income from continuing operations to be $120,000. During 2010, the following events also occurred:

1. During July the company sold Division M (a component of the company). It has determined that the pretax income from the operations of Division M during 2010 totals $39,000 and that a pretax loss of $40,500 was incurred on the sale of Division M.
2. The company had 21,000 shares of common stock outstanding during all of 2010. It declared and paid a $1 per share cash dividend on this stock.
3. The company experienced an extraordinary event. It recognized a material pretax gain of $26,000 on the event.4. The company found and corrected a pretax $18,000 understatement of the 2009 ending inventory because of a mathematical error.

Required:
Assuming that all the œpretax items are subject to a 30% income tax rate:
1. Complete the lower portion of Cameron Company's 2010 income statement, beginning with œPretax Income from Continuing Operations.
2. Prepare an accompanying retained earnings statement.

Reference no: EM13874364

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