Performance Corporation was organized on January 1, 2014. At the end of 2014, the company had not yet employed an accountant; however, an employee who was €œgood with numbers€ prepared the following statements at that date:

Required:
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 2014 (correct net earnings is $ 30,000) and a proper statement of financial position at December 31, 2014 (correct total assets are $ 142,000).

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Performance Corporation December 31, 2014 Income from sales of merchandise Total amount paid for goods sold during 2014 Selling costs Depreciation (on service vehicles used) Income from services rendered Salaries and wages paid $175,000 (90,000) (25,000) (10,000) 52,000 (62,000) Performance Corporation December 31, 2014 Resources Cash Merchandise inventory (held for resale) Service vehicles Retained earnings (net earnings of 2014) $32,000 42,000 50,000 30,000 $154,000 Grand total Debts Payable to suppliers Note owed to bank Due from customers 22,000 25,000 13,000 60,000 Total Supplies on hand (to be used in rendering services) Accumulated depreciation (on service vehicles) Contributed capital, 6,500 shares $ 15,000 10,000 65,000 Total Grand total 90,000 $150,000 Accumulated depreciation represents the cost related to the used portion of the asset and should be subtracted from the asset balance