CT2-5 A Further Look at Financial Statements THE KENMARE CASE Kenmare Architects Ltd. (KAL) was incorporated and commenced operations on January 1, 2020. Sheila Kenmare, the company's only employee, consults with various clients and uses expensive equipment to complete her work. When the company was formed, Sheila bought 10,000 common shares but at the beginning of 2021, another 1,000 common shares were sold to Sheila's mother. In addition to selling shares, KAL received financing from Sheila's Uncle Harry in the form of a loan that was taken out on January 1, 2020. Her uncle required the company to pay only the interest on the loan and no principal in 2020, which KAL did. However, he wanted both interest and a portion of the principal to be paid during 2021. These payments were made evenly throughout 2021. Harry was surprised when Sheila paid down more of the loan balance in 2021 than he asked her to. The financial statements of the company for the past two years are presented below and on the next page. The assigned problems for this case will be distributed separately. KENMARE ARCHITECTS LTD.