For the year ended December 31, 2016, Tootsie Roll Industries reported net earnings of $67,319 thousand, yet it included $67,510 thousand in retained earnings.

1. Explain what the difference represents.

2. When reviewing the financial statements explain how the four financial statements are linked together. Explain by using numbers found on these reports dated 12/31/16.

CONSOLIDATED STATEMENTS OF Earnings and Retained Earnings - USD 12 Months Ended ($) shares in Thousands, $ in Thousands Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 CONSOLIDATED STATEMENTS OF Earnings and Retained Earnings Net product sales $ 517,373 S536,692 $ 539.895 Rental and royalty revenue 3.727 3,420 3,630 Total revenue 521,100 540,112 543,525 Product cost of goods sold 320,290 340,090 340,933 Rental and royalty cost 1,019 889 947 Total costs 321,309 340,979 341,880 Product gross margin 197,083 196,602 198,962 Rental and royalty gross margin 2,708 2.531 2.683 Total gross margin 199,791 199,133 201,645 Selling, marketing and administrative 107,377 108,051 expenses 117,722 Eamings from operations 92,414 91,082 83,923 Other income, net 5,498 1,496 7,371 Eamings before income taxes 97,912 92,578 91.294 Provision for income taxes 30,593 26,451 28,434 Net earnings 67,319 66,127 62,860 Less: Net earnings (loss) attributable to (191) 38 noncontrolling interests (438) Net earnings attributable to Tootsie Roll $ 67,510 $ 66,089 $ 63,298 Industries, Inc. Net earnings attributable to Tootsie Roll Industries, Inc. per share (in dollars per S 1.08 $ 1.04 S 0.99 share) Average number of shares outstanding in 62.239 63.256 shares) 64,173 Retained earnings at beginning of period $ 52,349 $ 64,927 $ 73,109 Net earnings attributable to Tootsie Roll 67,510 66,089 63,298 Industries, Inc. Cash dividends (22,209) (21,308) (19,199) Stock dividends (53,817) (57,359) (52.281) Retained earnings at end of period $ 43.833 $ 52,349 $ 64,927 12 Months Ended Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 $ 67,319 $ 66,127 $ 62.860 (3,816) (4,145) (4,453) (688) 1,446 (2,746) (1,642) (1,451) (1,804) (2,330) (5) (4.550) CONSOLIDATED STATEMENTS OF Comprehensive Earnings - USD ($) S in Thousands CONSOLIDATED STATEMENTS OF Comprehensive Earnings Net earnings Other comprehensive income (loss), before tax: Foreign currency translation adjustments Pension and postretirement reclassification adjustment: Unrealized gains (losses) for the period on postretirement and pension benefits Less: reclassification adjustment for (gains) losses to net earnings Unrealized gains (losses) on postretirement and pension benefits Investments: Unrealized gains (losses) for the period on investments Less: reclassification adjustment for gains) losses to net earnings Unrealized gains (losses) on investments Derivatives: Unrealized gains (losses) for the period on derivatives Less: reclassification adjustment for gains) losses to net earnings Unrealized gains (losses) on derivatives Total other comprehensive income (loss), before tax Income tax benefit (expense) related to items of other comprehensive income Total comprehensive earnings Comprehensive earnings (loss) attributable to noncontrolling interests Total comprehensive earnings attributable to Tootsie Roll Industries, Inc. (151) (428) (606) 5 (146) (428) (606) 2.832 (3,814) (3,137) 1,150 4,133 1,295 3,982 319 (1,842) (2,310) (4,259) (11,451) (572) 2.991 (7) 61,861 64,437 54,400 (191) 38 (438) $ 64,628 $ 61,823 $ 54,838 Dec. 31, 2016 Dec. 31, 2015 $ 119,145 382 67,513 $ 126,145 395 42, 155 42,964 51,010 3.299 2.772 34,631 22.900 7,146 1,320 299,300 35,032 27,231 5,935 3,131 293,806 22.081 116,398 369.802 3,546 511,827 330.922 180,905 22.188 114,562 357,627 5,158 499,535 314,949 184,586 CONSOLIDATED STATEMENTS OF Financial Position - USD ($) Sin Thousands CURRENT ASSETS: Cash & cash equivalents Restricted cash Investments Accounts receivable trade, less allowances of $1,884 and 2,225 Other receivables Inventories: Finished goods & work-in-process Raw material & supplies Prepaid expenses Deferred income taxes Total current assets PROPERTY, PLANT & EQUIPMENT, at cost: Land Buildings Machinery & equipment Construction in progress Property, plant and equipment, gross Less-accumulated depreciation Net property, plant and equipment OTHER ASSETS: Goodwill Trademarks Investments Split dollar officer life insurance Prepaid expenses and other Deferred income taxes Total other assets Total assets CURRENT LIABILITIES: Accounts payable Bank loan Dividends payable Accrued liabilities Postretirement health care Income taxes payable Deferred income taxes Total current liabilities NONCURRENT LIABILITIES: Deferred income taxes Bank loans Postretirement health care Industrial development bonds Liability for uncertain tax positions Deferred compensation and other liabilities Total noncurrent liabilities TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY: Capital in excess of par value Retained earnings Accumulated other comprehensive loss Treasury stock (at cost) 83 shares and 80 shares, respectively 73.237 175,024 164,665 26.042 602 326 439,896 920,101 73,237 175,024 152,930 26,042 3,050 308 430,591 908,983 10.320 336 5,573 46,300 513 11,322 231 5,486 50,117 448 4,436 22 72.062 519 63,561 46,060 230 11,615 7.500 5,185 47,594 383 10,952 7,500 5,101 74,412 66,843 145,002 138,373 646,768 43.833 (20,246) 622,882 52,349 (17,364) (1,992) (1,992) 711,364 698,183 174 711,538 920,101 365 698,548 908,983 Total Tootsie Roll Industries, Inc. shareholders' equity Noncontrolling interests Total equity Total liabilities and shareholders' equity Common Stock TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY: Common stock, S.69-4/9 par value- 120,000 shares authorized 37,701 and 37,382, respectively, issued. Class B common stock, S.69-4/9 par value- 40,000 shares authorized 24,221 and 23,542, respectively, issued Class B Common Stock TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY: Common stock, S. 69-4/9 par value- 120,000 shares authorized 37,701 and 37,382, respectively, issued. Class B common stock, S.69-4/9 par value- 40,000 shares authorized 24,221 and 23,542, respectively, issued 26.181 25.960 $ 16,820 $ 16,348 Dec. 31, 2016 Dec. 31, 2015 $ 1,884 83 $ 2.225 80 CONSOLIDATED STATEMENTS OF Financial Position (Parenthetical) - USD ($) shares in Thousands, $ in Thousands Trade accounts receivable, allowances Treasury stock, shares Common Stock Common stock, par value in dollars per share) Common stock, shares authorized Common stock, shares issued Class B Common Stock Common stock, par value in dollars per share) Common stock, shares authorized Common stock, shares issued $ 0.6944 $ 0.6944 120.000 37,701 120,000 37,382 $ 0.6944 $ 0.6944 40,000 24,221 40,000 23,542 12 Months Ended Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 $ 67,319 $ 66,127 $ 62,860 19,627 199 20,388 255 20.758 (946) 529 2,830 3,105 3.261 6,869 473 4.183 2,999 (2,061) (5,797) (1,216) 3,125 (8,929) 1,119 7,530 11,593 3,839 (115) (903) (12,936) (2,007) 1,289 (7,329) 9,524 (1,268 (78) (1,289) 3,465 98,550 91,073 88,769 CONSOLIDATED STATEMENTS OF Cash Flows - USD ($) $ in Thousands CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation Deferred income taxes Netloss on step acquisition Amortization of marketable security premiums Changes in operating assets and liabilities: Accounts receivable Other receivables Inventories Prepaid expenses and other assets Accounts payable and accrued liabilities Income taxes payable Postretirement health care benefits Deferred compensation and other liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Net cash acquired in step acquisition Change in restricted cash Capital expenditures Purchases of trading securities Sales of trading securities Purchase of available for sale securities Sale and maturity of available for sale securities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Shares purchased and retired Dividends paid in cash Proceeds from bank loans Repayment of bank loans Net cash used in financing activities Effect of exchange rate changes on cash Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental cash flow information: Income taxes paid Interest paid Stock dividend issued (16,090) (4,569) 1,433 (81,835) 1,149 (15,534) (4,095) 16,644 (61,951) 161 224 (10,704) (4.294) 727 (54,882) 49,177 55.264 38,309 (51,884) (8,523) (30,459) (33,004) (20,775) (25,020) (19,241) (29,093) (22,266) 2,760 (2,788) (51,387) (2.279) (7,000) (133) (53,912) (2,601) 26,037 (403) (44,664) (1,821) 11,825 126,145 88,283 100,108 126,145 119,145 100.108 36,365 34 $ 61,671 24,940 17 $ 57,220 26,599 34 $ 52,165