Precision Corporation was organized on January 1, 2021. At the end of 2021, the company had not yet employed an accountant; however, an employee who was “good with numbers” prepared the following statements at that date:

Required:
1. List all deficiencies that you can identify in these statements. Give a brief explanation of each one.
2. Prepare a proper income statement (correct net income is $32,250 and income tax expense is $10,750) and balance sheet (correct total assets are $140,000).

PRECISION CORPORATION December 31, 2021 Income from sales of merchandise Total amount paid for goods sold during 2021 Selling costs Depreciation (on service vehicles used) Income from services rendered Salaries and wages paid $ 180,000 (90,000) (25,000) (12,000) 52,000 (62,000)