Performance Corp. was organized on January 1, 2016. At the end of 2016, the company had not yet employed an accountant; however, an employee who was "good with numbers" prepared the following statements at that date:

PERFORMANCE CORPORATION

December 31, 2016

Income from sales of merchandise $175,000

Total amount paid for goods sold during 2006 (90,000)

Selling costs (25,000)

Depreciation (on service vehicles used) (10,000)

Income from services rendered 52,000

Salaries and wages paid (62,000)

PERFORMANCE CORPORATION

December 31, 2016

Resources:

Cash $32,000

Merchandise inventory (held for resale) 42,000

Service vehicles 50,000

Retained earnings (profit earned in 2016) 30,000

Grand total $154,000

Debts:

Payables to suppliers $22,000

Note owed to bank 25,000

Due from customers 13,000

Total $60,000

Supplies on hand (to be used in rendering services) $15,000

Accumulated depreciation* (on service vehicles) 10,000

Contributed capital, 6,500 shares 65,000

Total 90,000

Grand total $150,000

* Accumulated depreciation represents the used portion of the asset and should be subtracted from the asset balance.

REQUIRED:

1. List all the deficiencies that you can identify in these statements. Give a brief explanation of each one.
2. Create a single-step income statement and a classified balance sheet using the proper accounting terminologies.

(Hint: Correct "net income (or income after taxes)" is $30,000, and correct "total assets" are $142,000).