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P1-42B The assets and liabilities of Auto Mechanics Ltd. as of December 31, 2017, and revenues and expenses for the year ended on that date follow. Interest expense $ 4,000 Accounts receivable $ 25,000 Land 95,000 Advertising expense 10,000 Note payable 95.000 Building 140,000 Accounts payable 21,000 Salary expense 85,000 Rent expense 6,000 Salary payable 12,000 Cash 10,000 Service revenue 210,000 Common shares 75,000 Supplies 3,000 Furniture 20,000 Property tax expense 5,000 Beginning retained earnings were $40,000, and dividends totalled $50,000 for the year. Beginning retained earnings were $40,000, and dividends totalled $50,000 for the year. Requirements 1. Prepare the income statement of Auto Mechanics Ltd. for the year ended December 31, 2017. 2. Prepare the Auto Mechanics Ltd. statement of retained earnings for the year. 3. Prepare Auto Mechanics's balance sheet at December 31, 2017. 4. Use the information prepared in Requirements 1 through 3 to answer the following: a. Was Auto Mechanics Ltd. profitable during 2017? By how much? b. Did retained earnings increase or decrease? By how much? c. Which is greater: total liabilities or total equity? Who has a claim against more of Auto Mechanics Ltd.'s assets: the creditors or the shareholders