The following selected accounts and account balances were taken from the records of Nowell Company. Except as otherwise indicated, all balances are as of December 31, Year 2, before the closing entries were recorded.

Consulting revenue	$	10,400
Cash		8,100
Cash received from common stock issued during Year 1		4,000
Travel expense		500
Dividends		1,500
Cash flow from investing activities		2,800
Rent expense		1,100
Payment to reduce debt principal		23,300
Retained earnings, January 1, Year 2		14,600
Salary expense		3,400
Cash flow from operating activities		2,550
Common stock, December 31, Year 2		12,000
Other operating expenses		1,900

Required

a. Prepare the income statement Nowell would include in its Year 2 annual report.

b. Identify the accounts that should be closed to the Retained Earnings account.

c-1. Determine the Retained Earnings account balance at December 31, Year 2.

c-2. Which of the following statement(s) is true?