Snowman Co. had the following December 31, 2017, accountbalances (listed in alphabetical order):

Account	12/31/2017 Balance
Administrative and Office Salaries Expense	$29,500
Advertising Expense	14,100
Bad Debt Expense	1,900
Common Stock, $10 par	110,000
Cost of Goods Sold	191,200
Depreciation Expense: Buildings & Office Equipment	10,000
Depreciation Expense: Sales Equipment	8,500
Dividend Revenue	900
Gain on Sale of Sales Equipment (pretax)	5,000
Interest Expense	4,900
Office Supplies Expense	1,800
Property Tax Expense	7,700
Retained Earnings, January 1, 2017	428,900
Sales	366,700
Sales Discounts Taken	5,200
Sales Salaries Expense	16,500
Sales Supplies Expense	4,600
Transportation out (deliveries)	6,000

Additional information not included in the above.

The tax rate is 30%

On April 1, 2017, the company sold Division M (a component ofthe company), which had been unprofitable for several years. Forthe first 3 months of 2017, Division M had operating revenues of$25,000 and operating expenses of $33,800. The division assets hada historical cost of $80,000, had been depreciated for seven yearsusing the straight line method, allowing for a $5,000 residualvalue, and a ten year life. The assets were sold for $45,000.

In the middle of December, 2017, the company incurred a material$5,500 pretax loss as a result of a flood on a river that floodsonce every 25 years.

During a review of the 2017 entries to ascertain what adjustingentries needed to be made, it was discovered that Legal Fees of$14,000, incurred in 2015 and associated with researching apotential patent were capitalized to the account patents in 2015.The patent was never applied for and the product idea was scrapped.In 2016 patent amortization was recorded, based on a twenty-yearpatent life. No amortization entry was recorded in 2017.

The company paid cash dividends of $.90 per share on its commonstock. All the stock was outstanding for the entire year.

While making its December 31, 2017 adjusting entries, thecompany conducted an analysis of its recent favorable experiencewith uncollectible accounts receivable, and decided to reduce thepercentage used in computing bad debt expense. The use of the newpercentage resulted in the $1,900 bad debt expense being $500 lessthan the amount that would have been calculated using the oldpercentage.

During 2017, the company elected to switch from the completedcontract method to the percentage of completion method for the workperformed by its Consulting Division. This division has been inexistence since 2015. The effect of this change was an increase inrevenue in 2015 of $15,000, an increase in 2016 of $20,000 and anincrease in 2017 of $25,000. The percentage of completion methodwas applied to all consulting revenue recorded in 2017. Consultingrevenue is combined with other sales revenue for reporting purposeson the financial statements.

REQUIRED:

Prepare a single step Income Statement for Snowman Co. beingsure to differentiate between Selling Expenses and AdministrativeExpenses.

Prepare a Statement of Retained Earnings for Snowman Co.

Where needed, provide schedules to show the details of yourcalculations and numbers.

Which of the “additional information” items would requirefootnote disclosure? Briefly explain what the footnote would needto state or explain.