A. (16 marks) PREPARATION OF INCOME STATEMENT and STATEMENT OF RETAINED EARNINGS The following is a trial balance for Zane Lid as at the recent fiscal year-end (December 314 2016): Account Title Debit Credit Accounts payable $ 2.400 Accounts receivable $ 3,100 Accumulated depreciation 26.500 Bank loan 56.000 Cash 1,400 Cost of goods sold expense 14,100 Depreciation expense 2.000 Dividends declared 4,100 Gain on sale of surplus machinery 1.000 Heat, light and utility expenses 400 Income tax expense Interest expense Inventory 11.500 Loss on long-term investments 2.050 Machinery 130,000 860 570 Other expenses 955 Other liabilities 4.300 Retained earnings 39.900 Salaries and wages 9.300 Sales revenue 29.700 Share capital 20.525 $180635 $120.235 REQUIRED: (12 marks) Based on the trial balance above, prepare in good format) the Income Statement and the Statement of Retained Earnings, for the year ended December 314 2016. If you feel that any assumptions are necessary, state your assumptions (b) (4 marks) The financial statements you prepared above are based on accrual accounting'. Explain what that means, using one example from the Zane Ltd. income statement to illustrate your