1. Prepare an income statement and a classified statement of financial position. The following items are taken from the financial statements of Adamato Ltd. for the year ended December 31, 2016: Income tax expense $ 1,000 Accounts payable 19,500 Accoun

1. Prepare an income statement and a classified statement of financial position.

The following items are taken from the financial statements of Adamato Ltd. for the year ended December 31, 2016: 

Income tax expense $ 1,000 

Accounts payable 19,500 

Accounts receivable 4,000 

Accumulated depreciation – equipment 4,800 

Bonds payable 18,000 

Cash 22,000 

Common shares (2,500 shares issued) 

25,000 Cost of goods sold 

12,000 Depreciation expense 4,800 

Dividends 300 

Equipment 48,000 

Goodwill 7,500 

Interest expense 3,500 

Retained earnings, beginning 16,000 

Salaries expense 8,200 

Sales revenue 32,500 

Supplies 4,500 

Market price per common share $4.50

2. Make 3 recommendations in terms of how the expenses can be managed to improve profitability