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Name: SOLUTION Enter the appropriate numbers in the shaded cells in columns I and K below. Radiant Cosmetics Inc. Income Statement (Partial) For the year Ended December 31, 2002 Income from operations before income taxes Income taxes Income from continuing operations Discontinued operations Income from operations of discontinued cosmetics division (net of income taxes of $8,000) 10,000 Loss on disposal of cosmetics division (net of income taxes of $20,000) (30,000) Extraordinary gain on extinguishment of debt (net of income taxes of $10,000) Net income Earnings per share Income from continuing operations Loss from discontinued operations Extraordinary gain Net income Radiant Cosmetics Inc. Retained Earnings Statement For the year Ended December 31, 2002 Retained earnings, January 1, 2002 Add: Correction of sales understatement in 2001 (net of income taxes of $21,000) Deduct correction for omission of depreciation of prior periods (net of income tax refund claim of $8,000) Adjusted retained earnings, January 1, 2002 Add: Net income per income statement Deduct: Dividends declared Retained earnings, December 31, 2002

$ 210,000 84,000 $ 126,000

$ (20,000) 15,000 $ 121,000

3.60 (0.57) 0.43 3.46

$ 620,000 39,000 $ 659,000 12,000 $ 647,000 121,000 $ 768,000 40,000 $ 728,000