ACC Income statement ... confused?

Question

At the beginning of 2007, the retained earnings of the Camerson Co. was $212,000. For 2007, the company has calculated its pretax income from continuing operations to be $120,000. Druing 2007, the following events also occurred:
1. During July the company sold Divsion M. It has determined that the pretax income from the operaions of division M during 2007 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 2007. 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 2006 ending inventory because of a mathematical error.

Assuming that all the "pretax" items are subject to a 30% income tax rate: 1. Complete the lower portion of a Cameron Company's 2007 income statement beginning with "Pretax Income from Continuing Operations."

Answer 1

Pretax profits from continuing op'ns 120,000
Income taxes 36,000
Profit from continuing op'ns, net of tax (subtotal) 84,000
DISCONTINUED OP'NS
Loss on discontinuance of Div. M 1,500
Income tax benefit from loss 450
Loss from discont'd op'ns, net of tax (subtotal) 1,050
EXTRAORDINARY ITEM
Gain from extraordinary event 26,000
Tax on gain 7,800
Extraordinary gain, net of tax (subtotal) 18,200

Net income $101,150

Statement of Retained Earnings
Bal. on Jan. 1, 2007 (as previously reported) $212,000
Prior year adjustment:
Understatement in 2006 ending inventory 18,000
Tax effect on above 5,400
Bal. on Jan 1, 2007 (as restated) $224,600
Add:
Net income 101,150
Less:
Dividend 21,000
Bal. on Dec 31, 2007 $304,750