Craft Carpentry Limited reports the following statement of financial position accounts, in alphabetical order:

Accounts payable...........................$ 15,600

Accounts receivable...........................13,100

Bank loan payable.............................32,000

Cash..............................................9,350

Common shares................................20,000

Equipment......................................30,500

Income tax payable.............................1,800

Intangible assets.................................5,000

Interest payable.................................$ 300

Inventory.........................................9,200

Prepaid insurance...............................1,000

Retained earnings.............................21,250

Salaries payable...................................700

Supplies..........................................2,800

Unearned revenue..............................1,800

Vehicles.......................................22,500

Instructions

(a) Classify each account as an asset (A), liability (L), or shareholders' equity (SE) item.

(b) Calculate total assets, total liabilities, and total shareholders' equity and prepare Craft Carpentry's accounting equation.

(c) Craft Carpentry's retained earnings were $18,000 at the beginning of the year. The company reported revenues of $296,750, expenses of $278,500, and dividends of $15,000 during the year. Prepare a calculation that proves how retained earnings of $21,250 at the end of the year were determined.