For each of the items listed below, indicate how it should be treated in the financial statements. Use the following letter code for your selections: a. Continuing operations b. Discontinued operations . Prior period adjustment 1. Obsolete inventory was written off. This was the first loss of this type in the company's history. 2. Discontinuance of all production in the United States. The manufacturing operations were relocated in Mexico. 3. A loss incurred from expropriation (the company owned resources in South America which were taken over by a dictator unsympathetic to American business). 4. Loss on the disposal of a component of the business. 5. Settlement of litigation with federal government related to income taxes of three years ago. The company is continually involved in various adjustments with the federal government related to its taxes. 6. Recognition of income earned last year which was inadvertently omited from last year's income statement. 7. The bad debt rate was decreased from 2% to 1%, thus decreasing bad debt expense