Malone Corporation's capital structure consists of 50,000 shares of common stock. At December 31, 2018 an analysis of the accounts and discussions with company officials revealed the following information:

Inventory, December 31, 2018 125,000

Unearned service revenue 4,400

Accrued interest payable 1,000

Salary payable 370,000

Patents 100,000

Retained earnings, January 1, 2018 290,000

Interest expense 17,000

General and administrative expenses 150,000

Dividends declared 29,000

Allowance for doubtful accounts 5,000

Notes payable (maturity 7/1/10) 200,000

Machinery and equipment 450,000

Materials and supplies 40,000

Accumulated depreciation 60,000

Sales $1,100,000

Purchase discounts 18,000

Purchases 642,000

Earthquake loss (net of tax) (extraordinary item) 42,000

Selling expenses 128,000

Cash 60,000

Wages payable 90,000

Common stock 200,000

Accumulated depreciation 180,000

Dividend revenue 8,000

Inventory, January 1, 2018 152,000

Prepaid rent expenses 20.000

Land 300000

Prepaid supplies expenses 20000

Deferred tax 15000

The amount of income taxes applicable to ordinary income was $48,600, excluding the tax effect of the earthquake loss which amounted to $18,000.

Instructions

(a) Prepare a multiple-step income statement.

(b) Prepare a retained earnings statement.