[SOLVED] Income Statement

You must answer all the questions in the proposed business case.Formalities:Submission file format: Excel document with all the answers, clearly identifying all steps, results, journals and including comments besides each answer. Submission date: The assignment must be submitted on Turnittin no later than 20th January at 23:59 CEST.It assesses the following learning outcomes:• Critically understand the different unusual events that affect the retained earnings. • Knowing how to elaborate an income statement • Knowing how to properly elaborate a statement of cash flow.Part 1: changes in retained earningsChester is a company dedicated to the transports.On 1st of March 2019, Chester sells its unprofitable segment, a restaurant activity.This segment generated in 2019 a net loss of $92,000 and its assets sold at a loss of $80,000.On 1st of May 2019, an earthquake destroyed one of Chester’s offices. The company suffered a loss of $230,000.On 31st of December 2019, the board of managers decides to change the depreciation method from straight line to 200% declining balance method for the fleet of trucks acquired the 1st of January 2016.The effect of the change is an additional expense of $96.000For the while year 2019 Chester reported an income from continuing operations of $1,950,000.Applicable tax rate is 30%.Chester had 200,000 shares of capital stock outstanding throughout the yearQuestion 1: Prepare a condensed income statement including proper presentation of the discontinued restaurant operations and the extraordinary loss. Include all appropriate earnings per share figures. (50 points)Part 2: Statement of cash flowsShown below is information from the financial statements for 2019 of Robbe’s Inc:Accounts Beginning of the year End of the year Accounts receivable $139.000 $100.000 Inventory $160.000 $150.000 Prepaid expenses $12.000 $21.000 Accounts payable $101.000 $97.000 Accrued liabilities $32.000 $30.000 Net sales $1.272.000 Cost of the goods sold $637.000 Expenses (inlcuding depreciation of € 68,000) $302.000