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

Accounts payable.........................$23,100

Accounts receivable.........................6,950

Bank loan payable..........................25,000

Cash..........................................17,750

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

Equipment...................................66,200

Income tax payable..........................1,900

Interest payable..............................$ 500

Inventory....................................21,300

Prepaid insurance..............................950

Retained earnings...........................39,850

Salaries payable..............................3,050

Supplies.......................................3,750

Unearned revenue...........................3,500

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 D&K Delivery's accounting equation.

(c) D&K Delivery's retained earnings were $8,850 at the beginning of the year. The company reported revenues of $365,000, expenses of $333,000, and dividends declared of $1,000 during the year. Prepare a calculation that proves how retained earnings of $39,850 at the end of the year were determined.