Question 1 (21 marks) At 31 December 2019, an analysis of the selected accounts of Cobra Corporation revealed the following information: Inventory, 1 January 2019 Inventory, 31 December 2019 Sales Purchase discounts Purchases Loss on discontinued operations (net of tax) Loss on closure of part of the retail division Selling expenses Dividend revenue Retained earnings, 1 January 2019 Interest expense Administrative expense Ordinary dividends declared Sales returns and allowances Sales discounts $152,000 125,000 1,142,000 18,000 642,000 28,000 14,000 128,000 8,000 290,000 17,000 136,000 29,000 55,000 37,000 Additional information: 1. Cobra Corporation's capital structure consists of 40,000 ordinary shares. 2. The income tax rate was 30%. Required: Prepare an income statement for the year ended 31 December 2019. Question 2 (10 marks) Based on the information in Question 1 above, assume Cobra Corporation changed its method of accounting for inventory from the first-in first-out method to the average cost method. Inventory in 2019 was correctly recorded using the average cost method. The new inventory method would have resulted in an additional $125,000 of cost of goods sold (before taxes) being reported on prior years' income statement. The income tax rate was 30%. Required: Prepare a retained earnings statement for the year ended 31 December 2019