E1-5 Suppose the following information was taken from the 2017 financial statements of Prepare income statement and pharmaceutical giant Merck and Co. (All dollar amounts are in millions.) retained earnings statement. (LO 3), AP Instructions Retained earnings, January 1, 2017 $43,698.8 Cost of goods sold 9,018.9 Selling and administrative expenses 8,543.2 Dividends 3,597.7 Sales revenue 38,576.0 Research and development expense 5,845.0 Income tax expense 2,267.6 (a) After analyzing the data, prepare an income statement and a retained earnings state- ment for the year ending December 31, 2017. (b) Suppose that Merck decided to reduce its research and development expense by 50%. What would be the short-term implications? What would be the long-term implica- tions? How do you think the stock market would react?