The following financial statements are available for SHERWOOD REAL ESTATE COMPANY:
|
Assets |
Liabilities |
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|
Cash |
$00,001,300 |
Accounts payable |
$0,100,000 |
|
|
Receivable from sale |
Mortgage payable |
6,000,000 |
||
|
of real estate |
5,000,000 |
Total liabilities. |
6,100,000 |
|
|
Interest receivable* |
180,000 |
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|
Real estate properties. |
$6,000,000 |
Stockholders Equity |
||
|
Capital stock |
$0,010,000 |
|||
|
Retained earnings |
5,071,300 |
|||
|
Total stockholders equity |
5,081,300 |
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|
Total liabilities and stock |
||||
|
Total assets |
$11,181,300 |
holders equity |
11,181,300 |
|
|
Income Statement |
|
|
Gain on sale of real estate |
$3,200,000 |
|
Interest income |
$180,000 |
|
Total revenues |
3,380,000 |
|
Expenses |
$1,200,000 |
|
Net income |
$2,180,000 |
Sherwood Company is using these financial statements to entice investors to buy stock in the company. However, a recent FBI investigation revealed that the sale of real estate was a fabricated transaction with a fictitious company that was recorded to make the financial statements look better. The sales price was $5,000,000 with a zero cash down payment and a $5,000,000 receivable. Prepare financial statements for Sherwood Company showing what its total assets, liabilities, stockholders equity, and income really are with the sale of real estate removed.