Presented below is a combined single-step income and retained earnings statement for Nerwin Company for 2012.

Additional facts are as follows.1. ??Selling, general, and administrative expenses?? for 2012 included a charge of $8,500,000 that was usual but infrequently occurring.2. ??Other, net?? for 2012 included an extraordinary item (charge) of $6,000,000. If the extraordinary item (charge) had not occurred, income taxes for 2012 would have been $21,400,000 instead of $19,400,000.3. ??Adjustment required for correction of an error?? was a result of a change in estimate (useful life of certain assets reduced to 8 years and a catch-up adjustment made).4. Nerwin Company disclosed earnings per common share for net income in the notes to the financial statements.InstructionsDetermine from these additional facts whether the presentation of the facts in the Nerwin Company income and retained earnings statement is appropriate. If the presentation is not appropriate, describe the appropriate presentation and discuss its theoretical rationale. (Do not prepare a revisedstatement.)

(000 omitted) Net sales Costs and expenses Cost of goods sold Selling, general, and administrative expenses $640,000 $500,000 66,000 17,000 Other, net 583,000 Income before income tax 57,000 Income tax 19,400 37,600 Net income 141,000 Retained earnings at beginning of period, as previously reported Adjustment required for correction of error (7,000) Retained earnings at beginning of perlod, as restated Dividends on common stock 134,000 (12,200) Retained earnings at end of period $159.400