Problem 1-10A Primary Assumptions Made in Preparing Financial Statements Millie Abrams opened a ceramic studio in leased retail space, paying the first month's rent of $300 and a $1,000 security deposit with a check on her personal account. She took molds and paint, worth about $7,500, from her home to the studio. She also bought a new firing kiln to start the business. The new kiln had a list price of $5,000, but Millie was able to trade in her old kiln, worth $500 at the time of trade, on the new kiln. Therefore, she paid only $4,500 cash. She wrote a check on her personal account. Millie's first customers paid a total of $1,400 to attend classes for the next two months. Millie opened a checking account in the company's name with the $1,400. She has conducted classes for one month and has sold $3,000 of unfinished ceramic pieces called geen war es are cash. Millic incurred $1,000 of personal cost in making the greenware. At the end of the first month, Millic prepared the following balance sheet and income statement Millie's Ceramic Studio Balance Sheet July 31, 2012 $1,400 5.000 $6400 S600 Equity Total SO Millie's Ceramic Studio Income Statement For the Month Ended July 31, 2012 $4400 Rent $300 Supplies Not income COO Millic needs to earn at least $3,000 each month for the business to be worth her time. She is pleased with the results, Required Identify the assumptions that Millie has violated and explain how each event should have been handied. Prepare a corrected balance sheet and income statement