Jaytag Ltd. (JL) is a public company listed on the TSX. Additional information on selected transactions/ events is provided below:1. At the beginning of 20X4, EC purchased some equipment for $650,000. The equipment has a residual value of $75,000 and an 8-year useful life. The accountant used the straightline method of depreciation but mistakenly forgot to deduct the residual value when determining the depreciation.2. EC contracted to build a new, specialized set of factory equipment. The construction began in 20X4 and will be completed in 20X8. The following relate to the construction period to date

The accountant used the completed-contract method in accounting for this contract.3. On 1 January 20X5, JL decided to make a strategic investment in Strata Inc. by purchasing 100,000 of the 500,000 common shares outstanding. As a result of this transaction, JL?s CEO was appointed to one of the four board of directors positions in Strata. JL paid $5 per share, which was representative of the fair value of the net identifiable assets of Strata on that day.JL recorded the investment at cost, and has not made any adjustments. On 1 November 20X5, Strata paid dividends totalling $40,000 ($0.08 per share). This amount was reported in earnings as investment income. They had earnings of $120,000 in 20X5. No investment income has been recorded.4. The balance of retained earnings at the beginning of 20X5 was $4,689,000. Income before income tax was $1,203,000 based on the records of the company?s accountant. JL is taxed at 30%.

Required:1. Calculate 20X5 earnings for JL.2. Prepare the retained earnings section of the comparative statement of changes in equity. Comparative numbers need not be shown.

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Contract price Costs incurred to date Estimated costs to complete Progress billings during the year 20X4 $1,800,000 690,000 585,000 600,000 20X5 $1,800,000 966,000 372,000 600,000