Answer:
1. Income statement for 2016.
Sales revenue ($1,661,000 + $15,000)                             $1,676,000
Less Cost of Sales 
Purchases ($1,490,000 + $145,000)                               ($1,635,000)
Gross Profit                                                                             $41,000
Less Expenses 
Office Expense                                              $95,000
Salaries and wages expense                     $955,000
Utilities Expense                                         $530,000     ($1,580,000)
Net Loss                                                                            ($1,539,000)
<u>2. Statement of retained earnings for the fiscal year ended August 31, 2015.</u>
Retained Earnings Beginning     $410,000
Dividends                                       $10,000
Retained Earnings Closing         $400,000
Explanation:
Income statement calculates profit : Profit = Gross Profit (Sales - Cost of Sales) - Expenses. Whilst Statement of retained earnings calculates closing balance in Retained Earnings : Closing Balance = Opening Balance + Profit for the year - Dividends