Whilst preparing its financial statements for the year ended 30 June 2010, lbex plc discovers that the sales figure for the year ended 30 June 2009 had been understated by EUR 200,000 as a result of a mathematical error. Trade receivables at 30 June 2009 had been understated by the state amount. This error is regarded as material.

The companys draft income statement for the year ended 30 June 2010, before correcting this error, is as follows:

	2010	2009
	000	000
Sales	3,320	3,480
Cost of sales	(1,340)	(1,460)
Gross Profit	1,980	2,020
Expenses	(1,180)	(1,120)
Profit before taxation	800	900
Taxation	(160)	(180)
Profit after taxation	640	720

Retained earnings at 30 June 2008 were EUR 1,720,000. No dividends were paid during the two years to 30 June 2010. It may be assumed that the companys tax expense each year is equal to 20 per cent of the profit before taxation.

Required:

(a) Prepare an income statement for the year ended 30 June 2010, showing restated comparative figures for the year ended 30 June 2009

(b) Compute the companys retained earnings at 30 June 2010 and the restated retained earnings at 30 June 2009.