Carlotta's Cakes Inc. is a private company reporting under ASPE. It is authorized to issue an unlimited number of common and $3 cumulative preferred shares. The following is an alphabetical list of its adjusted accounts at May 31, 2017, its fiscal year end. All accounts have normal balances.
| Accounts payable |
$ 38,500 |
Income tax expense |
$ 11,230 |
| Accounts receivable |
15,300 |
Insurance expense |
7,500 |
| Accumulated depreciation-equipment |
126,000 |
Interest expense |
4,500 |
| Cash |
20,600 |
Inventory |
70,220 |
| Cash dividends-common |
50,000 |
Notes payable |
75,000 |
| Cash dividends-preferred |
7,500 |
Preferred shares |
150,000 |
| Common shares |
50,000 |
Rent expense |
24,500 |
| Cost of goods sold |
277,475 |
Retained earnings |
73,000 |
| Depreciation expense |
42,000 |
Salaries expense |
67,800 |
| Dividend payable |
7,500 |
Sales |
504,500 |
| Equipment |
420,000 |
Supplies expense |
5,875 |
The note payable is due in 2019. There are 10,000 common shares issued and 5,000 preferred shares issued as at May 31, 2017.
Instructions
Prepare an income statement, statement of retained earnings, and balance sheet.