A summary of the operations of Streuling Company for the year ended May 31, 2003, is shown below. Advertising expense.......... $ 2,760 Supplies expense............ 37,820 Rentiexpensemers tr on. e 1,500 Salaries expense............. 18,150 Miscellaneous expense........ 4,170 Dividendstt=: Soneh etek eee ete $ 12,400 Retained earnings (6/1/02)...... 156,540 INcOMestaXe Sane eae 21,180 Consulting fees (revenues) .... . 115,100 Administrative expense ....... 7,250 1. Determine the net income for the year by preparing an income statement. (Assume that 3,000 shares of stock are outstanding.) 2. Compute the return on equity (ROE) for Streuling Company, assuming total owners’ equity is $255,000. Interpretive Question: What does the ROE ratio explain about Streuling’s profitability? 4. Interpretive Question: Assuming an operating loss for the year, is it a good idea for Streuling to still pay its shareholders dividends?