Spring Creek Realty Inc., organized July 1, 2004, is operated by Bob Gibbs. How many errors can you find in the following financial statements for Spring Creek Realty Inc., prepared after its first month of operations?
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Spring Creek Realty Inc. Income Statement July 31, 2004 |
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Sales commissions |
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$46,100 |
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Operating expenses |
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Office salaries expense |
$8,150 |
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Rent expense |
3,800 |
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Automobile expense |
1,750 |
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Dividends |
1,000 |
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Miscellaneous expense |
775 |
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Total operating expenses |
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15,475 |
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Net income |
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$20,625 |
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Bob Gibbs |
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Retained Earnings Statement |
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July 31, 2003 |
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Net income for the month |
$20,625 |
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Retained earnings, July 31, 2004 |
$20,625 |
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Balance Sheet Inc. For the Month Ended July 31, 2004 |
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Assets |
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Cash |
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$30,425 |
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Notes payable |
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10,000 |
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Total assets |
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$40,425 |
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Liabilities |
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Land |
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$20,200 |
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Stockholders’ Equity |
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Capital stock |
$10,000 |
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Retained earnings |
20,625 |
30,625 |
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Total liabilities and stockholders’ equity |
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$50,825 |
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Spring Creek Realty Inc. Statement of Cash Flows July 31, 2004 |
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Cash flows from operating activities: |
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Cash receipts from sales commissions |
$ 46,100 |
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Cash flows from investing activities: |
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Cash payments for land |
(20,200) |
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Cash flows from financing activities: |
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Cash receipts from retained earnings |
40,625 |
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Net increase in cash during July |
$ 66,525 |
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Cash as of July 1, 2004 |
0 |
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Cash as of July 31, 2004 |
$ 66,525 |