It's okay, even Dan Quayle can't spell Potato. That said, I clicked on this really hoping we would be in for a reliving of the Dan Quayle incident.
Anyways, it sounds like this little kid is just being... you guessed it, a little kid! Regardless of whether or not she can correctly spell potato, she undoubtedly doesn't believe it's spelled P-"Mashed". She's just being silly. That said, I remember my parents being proud of me in first grade because my teacher reported to them that I was one of the few children in our class who spelled "monster" correctly. I don't recall how old I would've been in first grade, but undoubtedly I was older than five, and if the majority of first graders in my class couldn't spell monster, then it should not be surprising if a five year old can't spell potato.