Financial Statements We-Sell Realty, organized August 1, 2016, is owned and operated by Omar Farah. We-Sell Realty Income Statement August 31, 2016 Sales commissions $140,000 Expenses: Office salaries expense $87,000 Rent expense 18,000 Automobile expense 7,500 Miscellaneous expense 2,200 Supplies expense 1,150 Total expenses 115,850 Net income $25,000 Omar Farah Statement of Owner's Equity August 31, 2015 Omar Farah, capital, August 1, 2016 $0 Less withdrawals during August 10,000 $(10,000) Investment on August 1, 2016 15,000 $5,000 Net income for August 25,000 Omar Farah, capital, August 31, 2016 $30,000 Balance Sheet For the Month Ended August 31, 2016 Assets Liabilities Cash $8,900 Accounts receivable $38,600 Accounts payable 22,350 Supplies 4,000 Owner's Equity Omar Farah, capital 30,000 Total assets $31,250 Total liabilities and owner's equity $72,600 Answer the following questions regarding the errors in the above statements for We-Sell Realty, prepared after its first month of operations. 1. Which of the financial statement(s) display the correct heading? 2. Which of the financial statement(s) cover a period of time? 3. On the income statement, where should the miscellaneous expense be listed? 4. What is the correct net income? $ This error also affects what other account balance? 5. What is the correct total for the total assets? $ What is the correct total for the liabilities? $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Financial Statements

We-Sell Realty, organized August 1, 2016, is owned and operated by Omar Farah.

We-Sell Realty
Income Statement
August 31, 2016
Sales commissions		$140,000
Expenses:
Office salaries expense	$87,000
Rent expense	18,000
Automobile expense	7,500
Miscellaneous expense	2,200
Supplies expense	1,150
Total expenses		115,850
Net income		$25,000

Omar Farah
Statement of Owner's Equity
August 31, 2015
Omar Farah, capital, August 1, 2016	$0
Less withdrawals during August	10,000
	$(10,000)
Investment on August 1, 2016	15,000
	$5,000
Net income for August	25,000
Omar Farah, capital, August 31, 2016	$30,000

Balance Sheet
For the Month Ended August 31, 2016
Assets		Liabilities
Cash	$8,900		Accounts receivable	$38,600
Accounts payable	22,350		Supplies	4,000
		Owner's Equity
			Omar Farah, capital	30,000
Total assets	$31,250		Total liabilities and owner's equity	$72,600

Answer the following questions regarding the errors in the above statements for We-Sell Realty, prepared after its first month of operations.

1. Which of the financial statement(s) display the correct heading?

2. Which of the financial statement(s) cover a period of time?

3. On the income statement, where should the miscellaneous expense be listed?

4. What is the correct net income?
$

This error also affects what other account balance?

5. What is the correct total for the total assets?
$

What is the correct total for the liabilities?
$

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