You are a staff accountant at a local CPA firm.Mymess Inc is an important client that has brought in its general ledger in order to have a compilation of its financial statements prepared. As a first step, you have asked a new employee, Sam Klutz, to construct an income statement and balance sheet.The results of Sam's work are presented below and on the next page.You have been tasked with reviewing Sam's work, and construct a memo to him.Your memo should identify each of the errors you find.You do not need to construct adjusting entries.However, you do need to explain the proper GAAP treatment for each item.

Mymess Incorporated Income Statement Year ending 12/31/2020 Net sales 3,920,000 Cost of sales 2,720,000 Unrealized gain on inventory (20,000) Gross profit 1, 220,000 Selling and administrative expenses 620,000 Rent 55,000 Depreciation and amortization 132,000 Interest expense 275,000 Income from operations 138,000 Other income Gain on sale of building* 385,000 Allowance for uncolletable accounts 40,000 Income before taxes 563,000 Provision for income taxes 152,010 Net income 410,990 Mymess sold its headquaters buiding to First National Bank for $480,000. The building had an original cost of $225,000 and accumulated derpreciation of $130,000. The company is leasing the building from the bank on a 20 year lease that requires annual rental payments of $35,000