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.

Beginning retained earnings were $40,000, and dividends totaled $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?

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$4,000 Accounts receivable 95,000 Advertising expense 95,000 Building 1,000 Salary expense $ 25,000 10,000 140,000 85,000 12,000 210,000 Interest expense Note payable Accounts payable 6,000 Salary payable 10,000 Service revenue 75,000 Supplies 20,000 Property tax expense nt expense Common shares urniture 5,000