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Costa Company, Pickett Company,effect of the errors, profits

Need some help creating a simple income statement and balance sheet. Pleas use the information provided below for Pickett Company for this application.
Below find a working trial balance for Pickett Company. This format is often used during the preparation phase of the financial statements since it provides a good overview.
Costa Company
Trial Balance (accounts in alphabetical order)
Accounts Working Trial Balance Balance Sheet Income Statement
Debit Credit Debit Credit Debit Credit
Accounts payable $14,500 $14,500
Accounts receivable $18,000 $18,000
Cash 41,500 41,500
Common stock 10,000 10,000
Depreciation expense 18,250 18,250
Cost of goods sold 402,610 402,610
Equipment (net of depreciation) 325,000 325,000
Insurance 1,500 1,500
Inventory 80,500 80,500
Long-term debt 105,000 105,000
Marketing 5,600 5,600
Misc. expenses 4,500 4,500
Paid-in capital 90,000 90,000
Property taxes 6,500 6,500
Rent 22,000 22,000
Retained earnings 156,400 245,500
Revenues 619,400 619,400
Salaries 61,940 61,940
Utilities 7,400 7,400

Total $995,300 $995,300 $465,000 $465,000 $530,300 $619,400
Net Income $89,100

I need prepare an income statement and a balance sheet in good format after adjusting for the two errors below.
â?¢ A physical count of inventory indicates $70,500 on hand.
â?¢ There's a check for $5,000 from a customer that has not been recorded in the working trial balance. The sale was never recorded in the first place, so the transaction relating to this sale is missing.

In addition
1. Please describe the effect of the errors on the income statement and balance sheet.
2. Is this company profitable? How do you determine whether or not this is the case.
3. Is the company in a solid financial position, i.e. comment on balance sheet.

Solution Preview

Attached is the trial balance for the firm for 2012 and the related Income Statement and Balance Sheet prior to adjusting for the two errors. The impact of the two errors is noted in the revised Income Statement and Balance Sheet, also in Excel (attached). The two errors are discussed below.

Error one: inventory count wrong

The current records show that inventory is $80,500. We see this by reviewing the inventory account in the trial balance. This means that the activity since last period, including the beginning balances, the purchases of inventory and the removal of items sold resulted in the $80,500 ending balance. However, when we counted the ...

Solution Summary

Your discussion is 394 words and includes statistics for Dell, GE and Coca-cola as comparisons for the firm. The two errors are discussed and the financial statements are shown "before" and "after" the errors are corrected.