Question 1 - Financial Statement Compilation (50 minutes) You have been provided the Statement of Financial Position and Statement of Earnings for MontEgg Inc., a breakfast diner in Montreal, for their December 31, 2020 year end. The financial statements were prepared by the controller's nephew, Dimitri, who has completed only one week of his undergraduate accounting course at university The controller is worried that there may be errors in his nephew's assembling of both financial statements using year-end balances. The controller has also confirmed there are no errors in any account balances - only in the assembly and presentation of the statements. Other information provided by the controller: Dimitri confirmed that he did not know how to report the depreciation expense of $7,000 for the equipment acquired in 2020 There were 50,000 common shares outstanding at the beginning of the year 2020. Rent revenue consisted of two parking spots rented to a neighboring business during the year. The tax amount is calculated correctly. . Required: 1. Prepare, in proper form, a corrected multiple step (classified) Statement of Earnings with all applicable accounts and necessary presentation (11 marks) 2. Prepare, in proper form, a corrected classified Statement of Financial Position with all applicable accounts and necessary presentation (16 marks). MontEgg Inc. Statement of Earnings Prepared by Dimitri Samson (in thousands of dollars) $ 2,192 71 6 Revenues & Gains Net Sales Deferred Revenue Interest Revenue Rent Revenue Goodwill Total Revenues & Gains 12 55 $ 2,336 Expenses & Losses Rent Expense $ (111) Revenues & Gains Net Sales Deferred Revenue Interest Revenue Rent Revenue Goodwill Total Revenues & Gains $ 2,192 71 6 12 55 $ 2,336 $ (111) Expenses & Losses Rent Expense Advertising Expense Cost of Sales Salaries Expense Dividends Declared Loss on disposal of Equipment Discontinued Operations (net of tax) Total Expenses & Losses Income Tax Payable Profit (Loss) (1,800) (128) (2) (8) (125) $ (2,181) (10) $ 145 MontEgg Inc. Statement of Financial Position Prepared by Dimitri Samson (in thousands of dollars) Assets Cash Inventory Accounts Receivable Land Equipment 20 101 125 $ 63 7 Liabilities Accounts Payable Loan Receivable - due May 26, 2021 Income Tax Expense Interest Payable Note Payable = due January 31, 2025 12 4 100 $ 63 7 Accounts Payable Loan Receivable - due May 25, 2021 Income Tax Expense Interest Payable Note Payable - due January 31, 2025 12 4 100 Shareholders' Equity Contributed Capital (50,000 Common Shares) Retained Earnings - January 1, 2020 $ 100 67