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, 2014, its fiscal year end. All accounts have normal balances.

Instructions
(a) Prepare an income statement, statement of retained earnings, and balance sheet.
(b) Calculate return on equity.
Taking It Further
Is the return on equity ratio useful when a company reports a loss?

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Accounts payable Accounts receivable Accumulated depreciation-equipment 1 Income tax expense Insurance expense Interest expense Cash dividends-common Cash dividends-preferred Preferred shares Cost of goods sold Depreciation expense Dividend payable Retained earnings Supplies expense