CP1 FINANCIAL REPORTING AND ANALYSIS CASE Using Financial Reports: Identifying and Correcting Deficiencies in a Statement of Earnings and a Statement of Financial Position Performance Corporation was organized on January 1, 2020. At the end of 2020, the company had not yet employed an accountant; however, an employee who was "good with numbers" prepared the following statements at that date: Performance Corporation December 31, 2020 Income from sales of merchandise $175,000 Total amount paid for goods sold during 2020 (90,000) Selling costs (25,000) (10,000) 52,000 (62,000) Depreciation (on service vehicles used) Income from services rendered Salaries and wages paid Performance Corporation December 31, 2020 Resources Cash Merchandise inventory (held for resale) Service vehicles Retained earnings (net earnings of 2020) Grand total Debts Payable to suppliers $ 32,000 42.000 50,000 30,000 $154,000 $ 22,000 Note owed to bank 25,000 Due from customers 13.000 Total 60,000 Supplies on hand (to be used in rendering services) $ 15,000 Accumulated depreciation (on service vehicles) 10,000 Contributed capital, 6,500 shares 65,000 Total 90,000 Grand total $150,000 Required: "Accumulated depreciation represents the cost related to the used portion of the asset and should be subtracted from the asset balance. 1. List all of the deficiencies that you can identify in these statements. Give a brief explanation of each one. 2. Prepare a proper statement of earnings for Performance Corporation for 2020 (correct net earnings is $30,000) and a proper statement of financial position at December 31, 2020 (correct total assets are $142,000)