D&K Delivery Limited reports the following statement of financial position accounts, in alphabetical order:

Accounts payable.....................................................$10,800

Accounts receivable...................................................16,400

Bank loan payable......................................................40,000

Cash......................................................................       11,250

Common shares...........................................................5,000

Income tax payable......................................................2,000

Interest payable............................................................. 400

Prepaid insurance...........................................................700

Retained earnings.....................................................42,250

Salaries payable..........................................................2,050

Supplies....................................................................   1,250

Unearned revenue....................................................2,500

Vehicles..................................................................  75,400

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 D&K Delivery's accounting equation.

(c) D&K Delivery's retained earnings were $22,250 at the beginning of the year. The company reported revenues of $172,000, expenses of $140,000, and dividends of $12,000 during the year. Prepare a calculation that proves how retained earnings of $42,250 at the end of the year were determined.