Intermediate Accounting Subject Question: Please solve the second question in a clear way. Thanks

Q1: (Multi-step Income Statement & Statement of Retained Earnings) Presented below is information related to Walt Disney Company for 2004. Retained earnings balance, January 1, 2004 Sales for the year Cost of goods sold Depreciation Expense mistakenly not reported in 2002 Telephone Expenses - Sales Advances from customers Interest revenue Rental revenue $ 850,000 39,000,000 19,000,000 32,000 27,000 117,000 70,000 50,000 80,000 40,000 28,000 820,000 15,000 25,000 Write-off of inventory due to obsolescence Accumulated depreciation Equipment Accumulated depreciation Building Write-off of goodwill (Infrequent or Unusual Item) Sales Discounts Sales Return Overstatement of income due change in inventory costing method Prepaid insurance Income taxes for 2004 Travel and entertainment Expenses Advertising Expenses Transportation-out Expenses Sales commissions Gain on the sale of short term securities Loss due to flood damage-extraordinary item Loss on the disposition of the wholesale division Loss on operations of the wholesale division Dividends declared and paid on common stock Dividends declared and paid on preferred stock 88,000 20,000 905,000 69,000 54,000 93,000 83,000 110,000 390,000 440,000 90,000 250,000 70,000 Requirement a. Prepare a multi-step income statement. American Horse Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, American Horse sold the wholesale operations to Rogers Company. During 2004, there were 300,000 shares of common stock outstanding all year. (06) Q2: Using the data given in question 01 answer the following. i. Prepare the Retained Earnings Statement for the year 2004. (04) ii. What is the conceptual different of discontinued operations from extraordinary item? (02)