Wilfred Fong is the owner and operator of Appliance Town Ltd. (ATL), Denzil's largest independent household appliance store. ATL supplies appliances to retail customers as well as to builders of the many new homes and apartments that are going up in the community. Sales to builders have grown substantially in the last year. ATL has been in business for five years and Wilfred has been happy with its performance.

ATL's balance sheet for August 31, 2016, the company's year-end, is shown below.

Wilfred uses the financial statements mainly for tax purposes and to show the holders of the long-term notes.

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Appliance Town Ltd Balance Sheet As of August 31, 2016 Assets Cash Accounts receivable Inventory Prepaids Furniture and fixtures Accumulated depreciation S 60,000 246,000 893,000 28,000 380,000 (80,000 $1,527,000 Liabilities and Shareholder's Equity Accounts payable Taxes payable Interest payable Long-term notes payable Common shares 530,000 40,000 17,000 200,000 220,000 520,000 $1,527,000 Retained earnings