Financial statements
We-Sell Realty, organized August 1, 2014, is owned and operated by Omar Farah. How many errors can you find in the following statements for We-Sell Realty, prepared after its first month of operations?
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We-Sell Realty Income Statement August 31, 2014 |
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Sales commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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Expenses: |
$140,000 |
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Office salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$87,000 |
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Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
18,000 |
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Automobile expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
7,500 |
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Miscellaneous expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
2,200 |
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Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
1,150 |
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Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
115,850 |
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Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$ 25,000 |
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Omar Farah Retained Earnings Statement August 31, 2013 |
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Retained earnings, August 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$0 |
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Less dividends during August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? |
10,000 |
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$(10,000) |
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Additional issuance of capital stock on August 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . ? ? |
15,000 |
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$5,000 |
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Net income for August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
25,000 |
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Retained earnings, August 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$30,000 |
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Balance Sheet For the Month Ended August 31, 2014 |
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Assets |
Liabilities |
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Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$ 8,900 |
Accounts receivable . . . . . . . . . . . . . . . . . . . . . |
$38,600 |
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Accounts payable |
22,350 |
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
4,000 |
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Stockholders’ Equity |
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Retained earnings . . . . . . . . . . . . . . . . . . . . . . |
30,000 |
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Total assets . . . . . . . . . . . . . . . . . . . . . . . |
$31,250 |
Total liabilities and stockholders’ equity . . |
$72,600 |