FINANCIAL REPORTING AND ANALYSIS CASE CP1-4 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 get 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) 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 (10,000) 52.000 (62,000) Retained earnings (net earnings of 2020) Grand total Debts Payable to suppliers Note owed to bank Due from customers Total $ 32,000 42,000 50,000 30,000 $154,000 $ 22,000 25,000 13.000 60,000 10,000 65,000 Supplies on hand (to be used in rendering services) $15,000 Accumulated depreciation (on service vehicles) Contributed capital, 6,500 shares Total Grand total 90,000 $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). CRITICAL THINKING CASES CP1-5 Making Decisions as a Manager: Reporting the Assets and Liabilities of a Business Emmanuel Lacas owns and operates Emmanuel's Shop (a sole proprietorship). An employee prepares a financial report for the business at each gear-end. This report lists all of the resources (assets) owned by Emmanuel, including such personal items as the home he owns and occupies. It also lists all of the debts of the business, but not his personal debts