Flint 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: $395,000 $5,300 3,500 8.800 386,200 FLINT COMPANY Income Statement December 31, 2021 Sales Less: Unearned revenue Purchase discounts Total revenue Cost of goods sold Purchases Less: Purchase returns and allowances Net purchases Add: Sales returns and allowances Cost of goods available for sale Add: Freight out Cost of selling merchandise Gross profit margin Operating expenses Freight in Insurance expense 232,500 4,100 236,600 7.600 244,200 9.500 253,700 132.500 4.600 10.400 o C 10,400 2,600 17,900 41,800 77,300 55,200 Insurance expense Interest expense Rent expense Salaries expense Total operating expenses Profit margin Other revenues Interest revenue Investment by owner Other expenses Depreciation expense Drawings by owner Profit from operations $1,600 3,300 4,900 7,500 48,000 55,500 (50.600) $4,600 FLINT COMPANY Balance Sheet Year Ended December 31, 2021 Assets Cash Accounts receivable Merchandise inventory, January 1, 2021 Merchandise inventory, December 31 2021 Equipment $75.000 $16,400 7.500 30.100 23.600 arch Assets $16,400 7,500 30,100 23,600 24,000 Cash Accounts receivable Merchandise inventory, January 1, 2021 Merchandise inventory, December 31, 2021 Equipment $75,000 Less: loan payable (for equipment 51,000 purchase) Total assets Liabilities and Owner's Equity Long-term investment Accumulated depreciation-equipment Sales discounts Total liabilities Owner's equity Total liabilities and owner's equity $101,600 $51.000 22,500 2.900 76,400 25.200 $101,600 The owner of the company Lily Oliver, is confused by the statements and has asked you for your help. She doesn't understand how it her Owner's Capital account was $79.000 at December 31, 2020, owner's equity is now only $25,200. The accountant tells you that $25,200 must be correct because the balance sheet is balanced. The accountant also tells you that he didn't prepare a statement of owner's 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