A combined statement of income and retained earnings for Riverbed Ltd. for the year ended December 31, 2020, follows. (As a private company, Riverbed 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 Riverbed Ltd.

Riverbed Ltd. Combined Statement of Income and Retained Earnings For the Year Ended December 31, 2020
	Sales revenue		$	5,780,000
	Cost of goods sold			2,810,000
	Gross profit			2,970,000
	Selling, general, and administrative expenses			1,700,000
	Income before income tax			1,270,000
	Income tax expense			444,500
	Income before unusual item			825,500
	Loss from tornado (net of taxes)			536,575
	Net income			288,925
	Retained earnings, January 1			1,114,425
	Retained earnings, December 31		$	1,403,350

For each of the three unrelated situations, prepare a revised combined statement of income and retained earnings for Riverbed Ltd. The company has a 35% income tax rate.

Situation 1. In late 2020, the company discontinued its apparel fabric division. The loss on the disposal of this discontinued division amounted to $640,000. This amount was included as part of selling, general, and administrative expenses. Before its disposal, the division reported the following for 2020: sales revenue of $1.18 million; cost of goods sold of $590,000; and selling, general, and administrative expenses of $460,200

Situation 2. At the end of 2020, the companys management decided that the estimated loss rate on uncollectible accounts receivable was too low. The loss rate used for the years 2019 and 2020 was 1.3% of total sales revenue, and owing to an increase in the write off of uncollectible accounts, the rate was raised to 4.0% of total sales revenue. The amount recorded in Bad Debt Expense under the heading Selling, General, and Administrative Expenses for 2020 was $75,140 and for 2019 it was $72,000. (Round answers to 0 decimal places, e.g. 5,275.) Situation 3. On January 1, 2018, the company acquired machinery at a cost of $600,000. The company adopted the declining-balance method of depreciation at a rate of 30% for this machinery, and had been recording depreciation over an estimated life of 10 years, with no residual value. At the beginning of 2020, a decision was made to adopt the straight-line method of depreciation for this machinery to better match expenses to their related revenues. Depreciation for 2020, based on the straight-line method, was included in selling, general, and administrative expenses. (Hint: a change in depreciation method is considered a change in estimate, not a change in accounting policy.) (Round answers to 0 decimal places, e.g. 5,275.)