Preparing a balance sheet and income statement. The accounting records of America Online reveal the following (amounts in thousands):

a. Prepare an income statement for America Online for the year ending June 30, Year 8. Refer to Exhibit 1.2 for help in designing the format of the statement.

b. Prepare a comparative balance sheet for America Online on June 30, Year 7, and June 30, Year 8. Refer to Exhibit 1.1 for help in designing the format of the statement.

c. Prepare an analysis of the change in retained earnings during the year ending June 30, Year 8.

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June 30 BALANCE SHEET ITEMS Year 7 Year 8 Cash $124,000 $ 631,000 Accounts Receivable 65,000 104,000 Other Current Assets 134,000 195,000 Property, Plant, and Equipment (net of depreciation) 233,000 363,000 Investment in Securities (noncurrent) 277,000 921,000 Accounts Payable to Suppliers. 68,000 87,000 Other Current Liabilities... 485,000 807,000 Long-term Debt .... 140,000 722,000 647,000 1,013,000 (507,000) (415,000) Common Stock ... Retained Earnings (Deficit) INCOME STATEMENT ITEMS Sales Revenue Interest Revenue Cost of Goods Sold Research and Development Expense Selling and Administrative Expenses. For Year 8 $2,600,000 21,000 1,678,000 175,000 604,000 (continued)