Delta Corporation's capital structure consists of 20,000 common shares at December 31. At December 31, 2020 an analysis of the accounts and discussions with company officials revealed the following information:

Sales................................................................................................. $1,300,000

Inventory, January 1, 2020.............................................................. 150,000

Purchases......................................................................................... 728,000

Purchase discounts........................................................................... 18,000

Inventory, December 31, 2020........................................................ 130,000

Tornado loss (net after $18,000 tax) .............................................. 42,000

Selling expenses.............................................................................. 148,000

Cash................................................................................................. 60,000

Accounts receivable........................................................................ 90,000

Common shares............................................................................... 200,000

Accumulated depreciation............................................................... 180,000

Dividend revenue............................................................................. 22,000

Unearned service revenue................................................................ 4,400

Accrued interest payable................................................................. 1,000

Land................................................................................................. 370,000

Patents.............................................................................................. 100,000

Retained earnings, January 1, 2020................................................. 350,000

Interest expense............................................................................... 15,000

Prior years cumulative effect of change from straight-line to accelerated

depreciation (net after $15,000 tax)..................................................... 45,000

General and administrative expenses.............................................. 172,000

Dividends declared.......................................................................... 52,750

Allowance for doubtful accounts..................................................... 5,000

Notes payable (maturity July 1, 2021)............................................. 200,000

Machinery and equipment............................................................... 450,000

Materials and supplies inventory....................................................... 40,000

Accounts payable............................................................................ 60,000

Unless indicated otherwise, you may assume a 25% income tax rate.

Required:

a) Prepare, in good form, a multiple-step income statement (10 marks)

b) Prepare, in good form, a retained earnings statement. (5 marks)