The accountant for ABC Corporation resigned late in December, and so a relatively inexperienced bookkeeper was asked to prepare the annual financial statements, with the unfortunate results shown below. You are assigned to prepare a correct set of financial statements on the tab "corrected statements". On the "errors" tab, enumerate the errors made by the bookkeeper, and explain briefly why each constituted an error. Statement of cash flows and statement of owners' equity have intentionally been omitted, and should not be prepared. Retained earnings as of 1/1/15 was $201,000. Income tax is to be accrued at the rate of 30%. Otherwise there are no missing accounts.

ABC Corporation				ABC Corporation
Income Statement				Balance Sheet
For Year Ended December 31, 2015				For Year ended December 31, 2015
Sales	3,000,000
Inventory	276,000			Cash		40,000		Accumulated depreciation	110,000
Gross margin		2,724,000		Treasury Stock		10,000		Accounts payable	120,000
				Accounts receivable	160,000
Depreciation expense	21,000			Allowance for bad debts	(8,000)	152,000		Total current liabilities	230,000
Rent expense	48,000
Dividends Expense	20,000			Investments		20,000
Salaries expense	482,000			Prepaid rent		12,000
Cost of goods sold	2,100,000
Utilities expense	17,000
Other operating expense	20,000			Notes payable (due in three years)		119,000		Common stock	60,000
Total operating expenses		2,708,000		Equipment		350,000		Retained earnings	201,000
		16,000		Restructuring costs		30,000
Operating income		12,000		Inventory		276,000		Total Liabilities & Equity	392,280
Interest expense		4,000		Total long-term assets		775,000
Net income
				Total Assets		1,009,000