OBGYN Consulting Inc., organized February 1, 2004, is operated by Dr. Cline. How many errors can you find in the following financial statements for OBGYN Consulting Inc., prepared after its first month of operations?
|
OBGYN Consulting Inc. Income Statement February 29, 2004 |
||
|
Fees earned |
|
$18,500 |
|
Operating expenses: |
|
|
|
Office salaries expense |
$8,500 |
|
|
Rent expense |
2,500 |
|
|
Automobile expense |
1,750 |
|
|
Dividends |
1,000 |
|
|
Miscellaneous expense |
550 |
|
|
Total operating expenses |
|
15,500 |
|
Net income |
|
$ 3,000 |
|
OBGYN Consulting Inc. Retained Earnings Statement February 29, 2005 |
|
|
Net income for the month |
$3,000 |
|
Retained earnings, February 29, 2004 |
$3,000 |
|
Dr. Cline Balance Sheet Inc. For the Month Ended February 29, 2004 |
||
|
Assets |
|
|
|
Cash |
|
$ 6,200 |
|
Notes payable |
|
10,000 |
|
Total assets |
|
$16,200 |
|
Liabilities |
|
|
|
Land |
|
$13,000 |
|
Stockholders’ Equity |
|
|
|
Capital stock |
$5,000 |
|
|
Retained earnings |
3,000 |
8,000 |
|
Total liabilities and stockholders’ equity |
|
$21,000 |
|
Statement of Cash Flows |
|
|
February 29, 2004 |
|
|
Cash flows from operating activities: |
|
|
Cash receipts from fees earned |
$18,500 |
|
Net cash from operating activities |
$18,500 |
|
Cash flows from investing activities: |
|
|
Cash payments for land |
13,000 |
|
Cash flows from financing activities: |
|
|
Cash receipts from issuance of capital stock |
5,000 |
|
Net increase in cash during February |
$36,500 |
|
Cash as of February 1, 2004 |
0 |
|
Cash as of February 29, 2004 |
$36,500 |