Question

The following balances were taken from the books of Al Hashem.Cop on December 31, 2020. Net...

The following balances were taken from the books of Al Hashem.Cop on December 31, 2020.

Net sales

$800,000

Cost of goods sold

$590,000

Selling expenses

$32,500

Administrative expenses

$24,000

Dividend revenue

$10,000

Interest revenue

$3,500

Write-off of inventory due to obsolescence

$40,000

Depreciation expense omitted by accident in 2018

$20,000

Interest expense

$25,000

Cash dividends declared

$22,500

Retained earnings at December 31, 2018

$490,000

60,000 ordinary shares were outstanding during the year.

Required:

a. Prepare an income statement for 2020.

b. Prepare a retained earnings statement for 2020.

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