Question 3:At the beginning of its 2013 calendaryear accounting period, Commet, Inc. had retainedearnings of $6,500,000. During 2013, Commet reported income from continuing operationsbefore taxes of $1,100,000. The following additional transactions occurred in 2013 but were notincluded in the $1,100,000. Assume all of the following were material.1. Commet had a restructuring charge of $16,000 (pretax).2. Commet had an uninsured flood loss of $20,000 (pretax) which was considered to beboth unusual and infrequent.3. During 2013, Commet decided to sell an unprofitable segment of its business. The saleof this segment qualifies as a discontinued operation for financial reporting purposes.However, at the end of 2013, the company had yet to sell the segment. On December31, 2013 the segment assets had a fair value minus anticipated costs to sell of$3,700,000 and a book value of $4,200,000. For the year, the segment reported anoperating loss of $500,000.4. Commet declared and paid cash dividends of $70,000 on its common stock.5. At the beginning of 2010, the company purchased a machine for $50,000 that theyexpensed during 2010. The company would normally have used the straightlinedepreciation method with a $500 salvage value and 9 year useful life. This wasdiscovered as the accountant was reviewing the information for the 2013 financialstatements. Depreciation expense on this machine for 2013 was not included in the$1,100,000 above.a. Prepare an income statement for the year 2013, beginning with Income from ContinuingOperations before Taxes. Assume the tax rate was 40%.b. What is the ending Retained Earnings balance for Commet, Inc. as of December 31,2013?