On May 1, 2018, Aero Flying School Ltd. was formed. Its assets, liabilities, share capital, revenues, expenses, and dividends as at May 31 follow:

Cash..............................................$ 26,900

Accounts receivable..............................22,600

Equipment.......................................372,500

Accounts payable...............................241,000

Common shares.................................180,000

Service revenue.................................215,300

Interest expense................................$ 15,500

Rent expense......................................12,100

Repair and maintenance expense...............40,900

Fuel expense.......................................85,400

Office expense....................................12,700

Salaries expense..................................36,600

Income tax expense...............................2,800

Dividends declared...............................2,700

Instructions

(a) Prepare an income statement, statement of changes in equity, and statement of financial position for the month of May.

(b) Explain why it is necessary to prepare the financial statements in the order listed in part P1.7B(a).