A Company recently hired a new accountant whose first task was to prepare the financial statements for the year ended December 31, 2021. The following is what he produced:

EMILY COMPANY Income Statement December 31, 2021
Sales								$394,000
Less: Unearned revenue						$5,500
Purchase discounts						3,300		8,800
Total revenue								385,200
Cost of goods sold
Purchases						232,500
Less: Purchase returns and allowances						4,000
Net purchases						236,500
Add: Sales returns and allowances						7,400
Cost of goods available for sale						243,900
Add: Freight out						9,600
Cost of selling merchandise								253,500
Gross profit margin								131,700
Operating expenses
Freight in						4,500
Insurance expense						10,500
Interest expense						2,400
Rent expense						18,100
Salaries expense						42,200
Total operating expenses								77,700
Profit margin								54,000
Other revenues
Interest revenue				$1,500
Investment by owner				3,300		4,800
Other expenses
Depreciation expense				6,600
Drawings by owner				48,000		54,600		(49,800	)
Profit from operations								$4,200

EMILY COMPANY Balance Sheet Year Ended December 31, 2021
Assets
Cash					$16,600
Accounts receivable					7,700
Merchandise inventory, January 1, 2021					29,800
Merchandise inventory, December 31, 2021					23,900
Equipment			$66,000
Less: loan payable (for equipment purchase)			49,300		16,700
Total assets					$94,700
Liabilities and Owner's Equity
Long-term investment					$49,300
Accumulated depreciationequipment					19,800
Sales discounts					3,000
Total liabilities					72,100
Owners equity					22,600
Total liabilities and owners equity					$94,700

The owner of the company, Emily Jamson, is confused by the statements and has asked you for your help. She doesnt understand how, if her Owners Capital account was $73,500 at December 31, 2020, owners equity is now only $22,600. The accountant tells you that $22,600 must be correct because the balance sheet is balanced. The accountant also tells you that he didnt prepare a statement of owners equity because it is an optional statement. You are relieved to find out that, even though there are errors in the statements, the amounts used from the accounts in the general ledger are the correct amounts.

Prepare a multi step income statement .