Prepare a multiple-step income statement and statement of retained earnings for the year ended December 31, 2017.

Unadjusted

December 2017 Transactions

1 On December 1, Rocky Ram, Inc. received $17,000 from Kanga Roo Inc. for partial payment of account. (First entry journalized and posted for you.)

2 On December 1, Rocky Ram, Inc. received $9,000 in advance for renting office space to Bullwinkle, Inc. for the December 1, 2017 through February 28, 2018.

3 On December 6, Rocky Ram, Inc. issued checks to Acne Corporation for $12,000, Bow & Arrow, Inc. for $8,000, and Boa Construction Inc. for $15,000 in payment on accounts.

4 On December 10, the company purchased supplies in the amount of $4,000 on account from Boa Construction Inc. (FOB Shipping Point, terms n/10, n/30), order shipped in December.

5 On December 10, Rocky Ram, Inc. received a check in the amount of $30,000 from Poodle & Co. in payment of account.

6 On December 15, Rocky Ram, Inc. made a sale in the amount of $80,000 to Poodle & Co (terms 2/10, n/30). The cost of the inventory sold was $55,000.

7 On December 17, Board of Directors declared $8,200 in dividends to be paid in January.

8 On December 20, the company paid employees $31,000 for wages earned during the period from December 1 through December 15, 2017.

9 On December 25, received full payment from Poodle & Co. for sale made December 15 (J6), within the discount period.

10 On December 25, Rocky Ram, Inc. made a sale in the amount of $140,000 to Bulldog Inc. (terms 2/10, n/30). The cost of the inventory sold was $90,000.

11 On December 28, Bulldog Inc. returned goods purchased on December 25, in the amount of $14,000. The cost of inventory was $9,000.

12 On December 28, Rocky Ram, Inc. ordered inventory from Bow & Arrow, Inc. in the amount of $50,000 (FOB Destination, terms 2/10, n/30), inventory is expected to arrive sometime in January.

13 On December 31, the company purchased office equipment costing $60,000. They paid $15,000 down on the equipment and signed a promissory note for the remaining balance. The note is due March 31, 2018.

14 On December 31, Rocky Ram, Inc. paid utility bills totaling $10,000 for utilities used during the month of December.

Rocky Ram, Inc.

Information for Year End Adjusting Journal Entries

December 31, 2017

1 The building (cost of $180,000) was purchased on January 1, 2016 and it is expected to have a useful life of 30 years with no salvage value. Depreciation expense has been recorded through November 30, 2017.

2 Office equipment (cost of $130,000) as of November 30, 2017 was purchased on January 1, 2012. The office equipment is expected to have a useful life of 10 years with $10,000 salvage value. Depreciation expense has been recorded through November 30, 2017.

3 Insurance in the amount of $6,000 was paid on April 1, 2017 covering the period of April 1, 2017 through March 31, 2018. The insurance expense and prepaid insurance accounts have been properly adjusted through November 30, 2017.

4 A December 31, 2017 count of supplies showed $5,100 of supplies remaining on hand.

5 Salaries earned but unpaid as of December 35, 2016 amount to $32,500.

6 The company has earned one of the three months rent previously received on December 1 from Bullwinkle Inc.

7 Interest at an annual rate of 2% is owed for the month of December 2017 on the Mortgage Note Payable due in 5 years (round interest to nearest whole dollar).

8 The savings account was opened on December 31, 2016. It earns interest at an annual rate of 1%, compounded monthly. Interest has been received and recorded through November 30, 2016. The bank notified the company that interest for the month of December was deposited in the savings account on December 31, 2017 (round interest to the nearest dollar).

9 Uncollectible accounts are expected to be $11,000 based on net sales.

10 Income taxes owed for the year amounted to $19,000.