Efendi Company hired an accounting intern, Pat Morgan, to prepare its income statement, statement of retained earnings, and balance sheet. Pat indicated a reluctance to undertake this task due to a lack of adequate training. But, Pat agreed provided someone would examine the work in detail and provide useful suggestions for improvement. Pat's work follows:

(a) Find specific errors in Pat's work. Prepare written review notes for Pat sufficient to allow Pat to understand the errors and make necessary corrections. To get you started, you may assume Pat did manage to get the listing of total assets correct.

(b) Provide your notes to a fellow classmate (just call your classmate Pat for purposes of this exercise), and have him or her prepare corrected reports, based solely on your notes -- right or wrong! Remember that achieving professional success not only depends on technical proficiency but also your ability to communicate and mentor others.

(c) Prepare corrected financial statements and compare them to the set provided by your classmate pursuant to requirement (b).

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Net income PAT MORGAN'S Income Statement December 31, 20X5 Services to customers Expenses Dividends Rent Revenues $125,000 $13,500 11,000 24,500 $100,500 PAT MORGAN'S Statement of Retained Earnings For the Year Ending December 31, 20X1 Beginning retained earnings Plus: Net income $ 45,000 100,500 $145,500 Less: Capital stock 200,000 Ending retained earnings $(54,500)