P44 Wavecrest Inc. reported income from continuing operations before tart of $1,200,000 during 201?. Additional transactions occurring in 2017+r but not included in the $1,200,000 are as follows: 1. The corporation experienced an insru'ed ood loss of $00,000 dru'ing the year. 2. At the beginning of 2015, the corporation purchased a machine for $54,000 [residual value of $9,000] that has a useful life of six years. The bookkeeper used straight-line depreciation for 2015, 2015, and 2012, but failed to deduct the residual value in calculating the depreciable amount 3. The sale of Fir-NI investments resulted in a loss of $102,000. 1L When its president died, the corporation gained $100,000 from an insurance policy. The cash sunender value of this policy had been carried on re books as an investroeot in the amount of $415,000 [the gain is non-taxable}. 5. The corporation disposed of its recreational division at a loss of $115,000 before tax. Assume that this transaction meets the criteria for accounting treatment as discontinued operations. 0. The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to increase 2015 income by $150,000 and decrease 2015 income by $20,000 before taxes. The FIFE) method has been used for 201?. Instructions (a) Prepare an income statement for the year 2012, starting 1with income from continuing operations before income tart. Calculate earnings per share as required under IFEIE. There were 00,000 common shares outstanding during the year. {Assume a tart rate of 30% on all items, unless they are noted as being non-taxable.) {b} Assume that beginning retained earnings for 201ir is $2,540,000 and that dividends of $125,000 were declared during the year. Prepare the retained earnings portion of the statement of changes in equity for 2012. {c} Discuss how proper classification and disclosure of items on the income statement help users in melting their investment and credit decisions