A combined statement of income and retained earnings for Monty Ltd$.$ for the year ended December $31,2023,$ follows. $($As a private company, Monty has elected to follow ASPE.$)$ Also presented are three unrelated situations involving accounting changes and the classification of certain items as ordinary or unusual. Each situation is based on the combined statement of income and retained earnings of Monty.Monty Ltd$.$ Combined Statement of Income and Retained Earnings For the Year Ended December $31,2023$ Sales revenue $ $5,780,000$ Cost of goods sold $2,850,000$ Gross profit $2,930,000$ Selling, general, and administrative expenses $1,780,000$ Income before income tax $1,150,000$ Income tax expense $402,500$ Income before unusual item $747,500$ Loss from tornado $($net of taxes$)485,875$ Net income $261,625$ Retained earnings, January $1971,750$ Retained earnings, December $31$ $ $1,233,375$Situation $1,$ in late $2023,$ the company discontinued its apparel fabric division. The loss on the disposal of this discontinued division amounted to $$590,000.$ This amount was included as part of selling, general, and administrative expenses. Before its disposal, the division reported the following for $2023$: sales revenue of $$1\mathrm{.}39$ million; cost of goods sold of $$695,000$; and selling, general, and administrative expenses of $$528,200.$